Trade War Is Not the Answer, Baker Cautions

Treasury Secretary James A. Baker III said today that he is not sure that the United States would win a trade war with Japan.

Baker told a Senate hearing that while “we do need more access to Japanese markets for beef, agricultural products, telecommunications and a lot of other things . . . I’m just not sure that the way to get there is to have an all-out trade war.”

“I’m not sure we’d win that,” he told the Senate Appropriations subcommittee on foreign operations.

Baker said the Reagan Administration is eager to secure an agreement at an annual economic summit with six other countries next month to set up a new round of international trade talks.

He predicted, however, that congressional approval of limits on U.S. imports from Japan would “absolutely foreclose the possibility” of convincing that nation to come to the trade table.

After the congressional hearing, reporters asked Baker about the effects of an international trade war.

“We’d have no market for our products,” he replied. “We’d be foreclosed from exporting. And it would have a very deleterious effect on the world economy.”

Earlier, Sen. Arlen Specter (R-Pa.) asked what would be wrong with a flat prohibition against any Japanese goods coming into the United States in excess of what Japan permitted into that country.

“The only thing that I think is wrong with that . . . is that (it) is outright protectionism, and what you’d be doing about that in my opinion would be a trade war,” Baker replied.

Specter asked if Baker was saying that such a bill would be vetoed.

“No sir, I’m not,” Baker replied.