TOKYO (AFX-ASIA) - Lawrence Lindsey, Chief economic advisor to President George W. Bush, said Japan will benefit from an economic policy shift in the U.S.
"The President has certainly indicated his support for free trade," Lindsey said in an interview with the Financial Times. "There are any number of countries with whom we might expand free trade. There are proposals to do it on a bilateral and multilateral basis and certainly in the case of Japan that would be a good step," he said. Lindsey also promised a more diplomatic approach to advising Japanese policymakers, saying: "I have met with Japanese officials before I came into the government and also after and I firmly believe that quiet, frank conversations are the best way to communicate as opposed to the public haranguing that went on previously."
Asked about his earlier criticism of European monetary and economic union, Lindsey refused to say whether the euro has proved a success, saying: "It's a European matter." His only cautionary note about Europe is a warning on projections that euro-zone growth at more than 3 pct will outstrip U.S. growth of just over 2 pct this year.
"I think you should look at what has happened to projections of U.S. growth," he said. "On a short-term basis, there is always the possibility of rapid adjustment. I am not saying whether I believe that will happen in Europe or not, but there is always a degree of risk." About the slowing U.S. economy, he refused to rule out the possibility that the U.S. economy is already in recession, and underlined the President's desire to reshape his tax-cutting package as a stimulus for the slowing economy.
However, he declined to give an estimate of the overall cost of accelerating the impact of the tax cuts. He said if Congress was concerned about the extra cost that might involve, it could legislate accordingly. "If you chose to do that you could decelerate portions of the tax-cut implementation, but that is a matter for Congress to decide," he said. Lindsey also said that the administration had settled on its selections for new governors to join the board of the Federal Reserve.