Optimism Prevails at Conference on U.S., Japan : Leaders Say Trade Friction May Produce Long-Term Benefits for Both Nations

Despite evidence that Americans believe trade with Japan is doing more harm than good, the continuing confrontation between the two countries is expected to generate long-term economic benefits for both, speakers at a conference on U.S.-Japan relations said Thursday.

Japanese and American leaders and executives participating in the conference, which is sponsored by the Los Angeles Times and the Yomiuri Shimbun, Japan’s largest newspaper, said the trade issue is forcing the United States and Japan to sort out the myths and realities of their economic partnership.

Coming to terms with that relationship, however, is not easy, as was evident during Thursday’s discussions. Talk about solutions to the growing U.S. trade deficit with Japan--expected to reach $50 billion this year--inevitably led to American criticism of Japanese practices and vice versa.

Both Americans and Japanese participants in the conference set forth what they believe was a better idea of how the other could help to solve the deficit.

Nevertheless, said Wataru Hiraizumi, member of Parliament and director of international affairs for the ruling Liberal Democratic Party of Japan, “The confrontation on the trade issue is not a wholly bad thing. By means of this kind of discussion . . . we deepened the understanding of it all.”

Executives, government officials and academicians met to discuss the results of a joint poll of Americans and Japanese conducted by The Times and Yomiuri. The survey showed clear differences in the ways that the American and Japanese publics view the trade issue.

Americans for the most part believe that trade with Japan is doing more harm than good, the poll showed; they believe that Japanese trade is partly or fully responsible for U.S. economic problems and that retaliatory measures against Japan should be adopted. In contrast, most Japanese believe that their nation is being unfairly blamed for U.S. trade problems.

Conference participants said that they had expected such perceptions but that the public attitudes lag behind the realities of some remedies already applied and structural changes occurring in the economies of both the United States and Japan.

William G. Ouchi, a panelist and professor of management at UCLA, explained that “restructuring is necessarily confusing to the public, business and government. This confusion is reflected in this kind of survey.”

“Ongoing trade relations are like a marriage--there are some good times and bad times. The trick is to get beyond the bad times to the good times,” Ouchi said.

Many American and Japanese participants agreed on one matter: The U.S.-Japan trade deficit has forced each country into serious self-examination.

“Americans have brought us this stimulus to change,” Hiraizumi said.

One example of such a change was Japan’s recent move to help reduce the value of the dollar, which has resulted in the dollar falling to 215 yen from 240.

Despite the tensions and trauma created by Japanese competition, some American businessmen believe that the confrontation was necessary to spur the U.S. government and businesses into action.

“History will show that the Japanese did Americans a great favor in the 1970s,” said Mark E. Buchman, executive vice president at Union Bank. “We’ve gotten a good swift kick from Japan in the marketplace. We’ll be happy for it in the future.”

He said he believes that Los Angeles and Tokyo together will eventually evolve into a financial center for the Pacific Rim countries, third in size after London and New York.

Chalmers Johnson, professor of Asian studies at the University of California, Berkeley, said the United States has failed to meet the challenge of Japan in such “institutional innovations” as creating harmonious labor-management relations and a high savings rate.

“Americans must quit kidding themselves that there is a scapegoat (in Japan’s trade policies),” create a “long-term strategy to make American industry sensitive to international trade” and restore manufacturing competitiveness in the United States, he said.

The Republican party under the Reagan Administration, he charged, believes in “doing nothing,” while the Democratic Party believes in protectionism.

“Neither will work,” Johnson said.

Trade Barriers Analyzed

Japan’s trade barriers are a problem but account for no more than one-fourth of the American bilateral trade deficit, he said. “Even if every single Japanese market were open, not more than $8 billion to $12 billion” in extra American products would be sold to Japan, he said.

Kuniko Inoguchi, an associate professor at Sophia University in Tokyo, said both intervention in foreign exchange markets and less military spending by the United States were needed to drive down the value of the dollar to make American exports more price-competitive in Japan. But she also warned that lower prices alone won’t be enough to sell more to Japan.

Demand there is becoming less price-sensitive and focusing more upon quality, she said.

In some cases, such as Alaskan oil, she said, “The United States is not willing to sell what Japan really wants to buy.”

American firms, she charged, are falling behind in quality because the educational level of American workers is lower than that of workers in Japan. More than 90% of Japanese youth obtain their high school degrees while only 75% of Americans go that far in their education.

“The United States must raise the standards of its education to increase the quality of its labor force. . . . There is an enormous discrepancy between (the high level) of American management and (the low level of) the American labor force,” Inoguchi said.

Inoguchi also complained that Americans have not come near to matching the Japanese in their efforts to learn about the other nation’s language and society.

“Speaking English is just as hard for us as is speaking Japanese for Americans,” she said, adding that greater “reciprocity” in efforts at mutual understanding is needed.

Times staff writer Sam Jameson also contributed to this article.