MercoPress. South Atlantic News Agency

US/Japan agree to stimulate demand and defend the dollar

President Barack Obama and Japanese Prime Minister Taro Aso

President Barack Obama and Japanese Prime Minister Taro Aso have agreed to work together to stimulate economic demand and fight protectionism. At a meeting in Washington they also pledged to co-operate in diplomatic efforts over North Korea, a White House statement said. Mr Aso was the first foreign leader to be received by the US president.

Before the talks Mr Obama said the alliance between the countries was the "cornerstone" of East Asian security. The US and Japanese economies are respectively the world's largest and second-largest. A statement following the White House talks said the two leaders "agreed to work closely and urgently... to stimulate demand at home and abroad, to help other countries respond to the global crisis, [and] to unfreeze credit markets". "They agreed fully on the need to resist protectionism," the statement said. Japan was one of the countries to express concern at a "Buy American" clause in the recently approved US stimulus package. The clause said American-produced materials should be used for public works in the US, though it was watered down with a pledge not to violate trade agreements. Mr Aso said the US and Japan needed to work "hand in hand" on the global downturn, and that it was crucial to maintain confidence in the dollar as a key currency. From Tokyo it was announced that Japanese exports plunged more than 45% in January compared to a year ago to hit the lowest figure ever recorded. In particular the demand for Japanese cars dropped by 69%. On North Korea, the two sides pledged to work through the process of six-party talks to end the country's nuclear weapons programme, and also to "deal with the problem of North Korea's missiles". The meeting came amid fears that North Korea was preparing to test a long-range missile. The two leaders also discussed global climate change, and Afghanistan. A Japanese foreign ministry official said on Tuesday that Toyko would pay the salaries of 80,000 police officers in Afghanistan for six months, as part of its commitment to help rebuild the country. The official said Japan would also provide funds to help build schools and hospitals, and provide a teacher-training programme. Money from the projects will come from the 2 billion US dollars Tokyo has pledged towards Afghan reconstruction since 2002. Ahead of the talks, Mr Obama spoke of the "strong partnership" between the US and Japan. "The alliance that we have is the cornerstone of security in East Asia, it is one that my administration wants to strengthen," said Mr Obama "It is for that reason that the prime minister is the first foreign dignitary to visit me here in the Oval Office." Mr Aso's trip follows a Tokyo visit by US Secretary of State Hillary Clinton. The BBC's Richard Lister in Washington says there is concern in Japan that relations with the US have been in decline. Japan's normally warm relationship with the Bush administration cooled when Washington removed North Korea from its list of states that sponsor terrorism. Tokyo felt the move was premature, and it is also concerned that Japan's standing in the region is being eclipsed by China.