Japan Bureaucrats Irked on Trade

Japan’s powerful government bureaucrats, angry at a constant barrage of overseas criticism of their country’s economic policies, are pushing Tokyo toward a more aggressive stance in negotiations with its trading partners.

The officials agree on a long-term need to reduce Japan’s huge current account surplus, which Prime Minister Yasuhiro Nakasone says could swell to $80 billion this year. But they are increasingly resistant to suggestions from overseas--especially from the United States--for quick-fix solutions to the problem.

“We have to set up a line beyond which we can concede no more,” one official at the Ministry of International Trade and Industry said. “We have come very near that line.”

Government officials argue that Japan has already done much to correct its trade imbalance--from opening its markets to more imports to helping drive the yen sharply higher against the dollar.

“So far, we have conceded many things to the U.S.,” the MITI official said. “In spite of that, they ask for the next thing, and the next thing, and the next thing.”

A Foreign Ministry official said: “We’ve got to get rid of the vicious circle of the U.S. attacking Japan, Japan responding, the U.S. saying it hasn’t done enough and attacking again. It is time for us to discuss what is the real problem behind the trade imbalance--the underlying economic structures of both countries.”

U.S. Must Make Changes, Too

While Japan acknowledges that it will have to shift its economy away from over-reliance on exports for growth, it has served notice that the United States must also be prepared to make some changes, such as cutting its huge budget deficit. The two countries are due to discuss such issues this summer.

“This isn’t going to be a one-sided dialogue,” the Foreign Ministry official said. “We will raise structural issues with the U.S. as well.”

Another government official said: “At least we have a plan for what we intend to do in the medium term; the U.S. doesn’t seem to have much of one.” He apparently was referring to Japan’s proposals to restructure its economy in order to boost imports and domestic demand.

“They always criticize other countries but never themselves. This causes frustration,” the official added.

The new militancy contrasts sharply with Japan’s posture in the past, when it seemed to bend over backward to avoid fanning protectionist sentiment in the United States. Now, the threat of what even President Reagan views as the most protectionist U.S. legislation for years is fostering hostility among the Tokyo bureaucracy.

“If such legislation is passed, I’m afraid there will be a strong, emotional reaction from many in Japan,” one official said.

The tough attitude stretches wide--from the Foreign Ministry, normally very sympathetic to complaints from overseas, to the usually more aggressive MITI.

Asking for the Impossible

At the Finance Ministry, officials complain that some members of the Reagan Administration are asking Tokyo to do what Washington refuses--boost government spending to stimulate the economy. The ministry is particularly sensitive to such criticism because it is waging a fierce battle against domestic pressure to abandon its tight fiscal stance.

At MITI, officials also say the United States is asking for the impossible--for changes in private business practices outside the government’s control.

“There are many things we can’t do, like intervene in the market mechanism or in private business practices,” a MITI official said. “We think such problems should be solved by talks among private sector companies, not between governments.”

MITI officials said Tokyo already has dealt with most of the government regulations that blocked imports and cannot impose its will on private industry in non-governmental areas such as business practices.

The tougher line has already surfaced in trade talks between Japan and the United States. MITI officials said negotiations on trade in semiconductors have dragged on for a year partly because Washington is pressing Tokyo for an increased share of the Japanese market for American industry.

“The government cannot tell private companies what they must buy,” one Japanese official said.

Japan also resisted suggestions from the United States for bilateral trade talks on engine parts for months because it felt that no government restrictions on trade existed in that area. Eventually, it agreed to talks on transportation equipment, but a Foreign Ministry official said Tokyo still maintains that there is little the government can do.

“There are many things we have to refuse because there are many things we can’t do,” one MITI official said. “In some cases, this could lead to severe friction.”