Is Tokyo Finally Listening?
The 100% tariffs that the Reagan Administration says it will impose next week on $300 million worth of Japanese electronic exports, in retaliation for the alleged violation of an agreement on semiconductor marketing, won’t make any visible dent in the nearly $60-billion U.S. trade deficit with Japan. Its chief purposes, rather, are to dramatize to Japan how politically serious the trade dispute has become for the United States while simultaneously trying to curb protectionist actions by Congress that could only harm American consumers. On the first point at least, some success has been achieved.
In a quick response to the U.S. move, leaders of Prime Minister Yasuhiro Nakasone’s Liberal Democratic Party have agreed to spend an additional $34 billion this year to boost the domestic economy. This is a course long urged by Washington, which hopes that a stimulative economic policy will help lessen Japan’s emphasis on growth through steady expansion of its export markets. More domestic spending should raise the demand for imports, thereby cutting into Japan’s overall $83-billion trade surplus, at the same time giving a lift to what has become a stagnating economy.
For now, though, all this is theory. The details of the supplemental spending plan are vague, its route through the Diet may prove difficult, its implementation remains to be demonstrated. Major programs to reduce Japan’s trade surpluses have been promised before, only to remain unfulfilled. Still, the Nakasone government does seem now to appreciate the need for prompt and concrete action. Major companies are already under strong government pressure, for example, to increase significantly their purchases of imported products.
Over the years, and after much pulling and hauling, Japan has in fact done a lot to open its markets to more foreign goods. At the same time, though, major parts of Japan’s economy remain heavily protected and essentially off-limits to foreign competition. It is in these important sectors--among them agriculture, finance, major construction projects and telecommunications--where action must be taken if protectionist sentiments in the United States and elsewhere are to be dampened.
Some signs have started to emerge of an improvement in the U.S. trade deficit, due mainly to the considerable rise in the value of the yen. The strong political perception nonetheless remains that Japan still is holding back in allowing its trading partners greater and fairer access to its markets. The Nakasone government once again is talking about taking actions to counteract that impression. The test will come in how quickly and fully it makes good on its plan.
