Changing a Trade Perception
Protectionists in the United States would try to rectify the nation’s mounting trade deficit through various actions to restrict imports--a course that would inevitably lead to higher retail prices, restricted consumer choices and foreign retaliation against American products. Ill-advised though it may be, the protectionist response nonetheless reflects a genuine concern. This year’s U.S. trade deficit is heading toward another record high of about $150 billion. A burden of that size cannot be carried for very long.
Much of the protectionists’ ire is aimed at Japan, whose $37-billion trade surplus with the United States in 1984 is this year likely to grow to at least $50 billion, accounting for about one-third of the overall deficit. But limiting imports from Japan, or levying a hefty tax on them, or even--as some in Japan have proposed--making them more expensive by imposing an export surcharge--would not be doing most Americans any favor. The freer the marketplace can be kept, the better off consumers will be.
Japan’s own marketplace is of course considerably less than wide open to a lot of foreign goods, as Clayton Yeutter, the U.S. trade representative, has just reminded his hosts in Tokyo. The entry of thousands of products, ranging from nail polish to duck meat to high-tech electronics, remains tightly controlled under an elaborate system of tariffs and non-tariff barriers. Prime Minister Yasuhiro Nakasone recently announced a new “action program” aimed at giving foreign products a better chance in Japan’s markets. But the program is a long way from being adopted. Even if it is approved by the Diet, and even if the bureaucracy can be made to cooperate in its implementation, it will still be years before the full program is in place.
Yeutter reaffirmed the Reagan Administration’s policy that “export restraint is no substitute for market access.” The United States particularly wants to see a more open market for American communications satellites, telecommunications equipment and aircraft. Certainly Japan canand should be doing a lot more, and quickly, to allow access to more U.S. exports. What Yeutter did not say, though Treasury officials have said it repeatedly, is that even a fully open Japanese market would right now allow for increased American sales of no more than $10 billion a year. That would still leave a formidable trade imbalance.
The trade problem is composed of many things, including the great strength of the dollar that has raised the cost of American products overseas and the lack of competitiveness in many U.S. industries. But the trade problem also has to do with perceptions, and among the stronger of those perceptions is that Japan hasn’t been playing fair in its import policy. Japan has it in its power to change that perception. In its own interest it should move promptly to do so.
