Japan Envoy Says Protectionist Bills Could Spur Trade Backlash

The passage of protectionist trade measures pending in Congress could undermine U.S.-Japanese trade relations and “snowball” into an international backlash, Japanese Ambassador Nobuo Matsunaga warned Wednesday.

Matsunaga defended Japan’s efforts to open its markets to foreign goods and said his government is “exerting its maximum efforts.” He argued that many American analysts believe that the “principal causes” of the trade imbalance with Japan stem from the Reagan Administration’s economic policies.

Matsunaga’s often-critical remarks, made at a breakfast session with reporters, drew immediate fire on Capitol Hill.

“I oppose protectionism, and I dislike being lectured on it by the representative of one of the most protectionist nations in the world today,” Sen. Lloyd Bentsen (D-Tex.), one sponsor of a measure to impose a 25% surcharge on products from nations with unfair trade practices, said through a spokesman.

‘All Can’t Be Winners’

In addition to Matsunaga’s warnings on growing protectionist sentiment, Clayton Yeutter, U.S. trade representative, on Wednesday criticized the 300 protectionist bills pending in Congress as “pessimistic and defeatist.” At a separate U.S. Chamber of Commerce breakfast session, Yeutter said that “we all can’t be winners” in a capitalistic system.

However, later Wednesday, Yeutter told officials of the Nippon Telegraph & Telephone Corp. that, though the Administration remains committed to free trade, Japan must act to cut the trade imbalance “pretty darn fast” because “Congress is very nervous.”

The remarks by Yeutter and Matsunaga were part of an increasingly volatile--and sometimes ambiguous--struggle over the U.S. trade deficit, which is expected to reach $150 billion this year, a third of that with Japan alone.

The Japanese government and the Administration have been put on the defensive as an irate Congress, recognizing that 1986 is an election year, has seized upon the issue, citing thousands of lost U.S. jobs.

Concerned that Congress will pass some of the legislation and even override a presidential veto, Matsunaga, like President Reagan, raised the specter of an international backlash.

‘Reactions Abroad’ Seen

“We believe these kinds of protectionist measures would undermine our trade relations,” the ambassador said, citing the proposed 25% surcharge. He further predicted “reactions abroad in many other countries,” saying: “Once it starts, I’m quite sure it will have a snowball effect.”

Matsunaga said he was “fully aware” of how seriously Americans view the trade deficit but added that “it is hard for us to accept the view . . . that this situation is entirely and exclusively Japan’s fault.” He cited the strong U.S. dollar, lagging economic recovery among other nations and the fierce competitiveness of the Japanese market as hindrances to U.S. exports to Tokyo.

Recent Japanese efforts to increase its imports have achieved results, Matsunaga contended. Sixty major Japanese firms have “targeted increased imports” worth $2.4 billion this year, he noted, and the Japanese government is asking 70 others to make the same pledge. U.S. firms already have a substantial share of the Japanese market in plastics, tomato juice, wine glasses, soft drinks, computers and dehydrated soups, he added.

‘Quality-Conscious Market’

“Japan is a tough, competitive and quality-conscious market,” Matsunaga said, “but it is richly rewarding those American companies with the right product, the marketing ingenuity and the long-term commitment to see it through.”

He added: “It is not enough for Japan to dismantle its import barriers. Potential exporters to Japan still have to study the market and how to compete in it.”

Bentsen, meanwhile, rejected the label of “protectionist” as applied to the 25% surcharge, saying that the proposal would merely take “modest steps that would be required” for Japan “to reduce its excessive surpluses.”

Stephen W. Hilton, press secretary to Sen. John C. Danforth (R-Mo.), rejected the ambassador’s contention that the Japanese are opening their markets. He noted that, despite agreements dating from 1981, U.S. telecommunications firms are still virtually locked out of Japan.

The Japanese “agreed to give the United States a fair shot at the business, and it’s been like pulling teeth,” Hilton said. “It’s yielded practically nothing in dollars . . . . If this is as fast as agreements can be implemented, then what good are agreements?”