In the Dispute With Japan, Let’s Trade Heat for Reason
The trade relationship between the United States and Japan reached a new and dangerous stage with the controversy over Toshiba Corp.’s shipment of advanced submarine manufacturing equipment to the Soviet Union. Americans already angry over Japan’s enormous trade surplus with this country were infuriated by Japan’s disregard for Western defense interests at the same time that Americans were debating plans to patrol the Persian Gulf--in part to protect Japan-bound oil.
From the American point of view, ingratitude scarcely begins to describe the attitude of Japan, a country whose industries have admitted spying on American manufacturing, dumping products in U. S. markets and closing their home markets to U. S. goods.
The Japanese have begun to show impatience with their trans-Pacific partner as well. They say that Americans are judgmental, aggressive and make no attempt to understand trade issues from Japan’s point of view.
Kenichi Ohmae, Japan’s most respected management consultant, argues that Americans misunderstand the basic trade relationship between the two countries. In “Beyond National Borders: Reflections on Japan and the World,” Ohmae argues most of the trade imbalance between the two countries is an illusion. In 1984 America’s visible trade deficit with Japan was $31.2 billion, but U. S.-owned companies and their affiliates produced $43.9 billion worth of goods in Japan. According to Ohmae, “Japan Inc.’s” most successful high-tech companies include IBM-Japan, Texas Instruments Japan and NCR. Goods that Texas Instruments produces in Japan and ships to the United States show up as American imports from Japan. Should Japan be blamed because American companies choose to produce goods there?
Ohmae is particularly critical of American corporate executives who, he says, mislead Americans. He points to Chrysler Chairman Lee A. Iacocca, who attacks Japan’s “colonization” of the U. S. market while Chrysler imports more Japanese cars than any other Big Three car maker. Ohmae charges many American attitudes toward Japan have their roots in racism, and he argues that the Japanese should be more forceful in attacking stereotypes.
One does not need to agree with Ohmae’s views to see that the gap between Americans and Japanese is widening. Both sides are more critical and less patient. Both countries feel abused and misunderstood. A long series of pinpricks and squabbles is building barriers of suspicion and mistrust on both sides.
If relations are to improve, and if the United States is to achieve satisfaction from negotiations with Japan, Americans need first to decide exactly what we want from Japan. Many of the demands we make are contradictory.
For example, Americans frequently complain that Japan is not paying its fair share for the common defense. There is much to be said for this point of view; we spend more than 6% of our gross national product on defense while Japan pays only 1%--though that still translates out to $23 billion. But do we really want Japan to rearm? It was, after all, Gen. Douglas MacArthur who insisted on Japanese disarmament.
If Japan made major increases in defense spending, it would develop its own high-tech armaments industry. Inevitably, its arms producers would compete with ours for foreign sales. Do we really want Japan to sell high-tech military hardware in the Middle East? If Japan were to build a strong air force, it would inevitably become a major factor in the aerospace industry. How would this help the U. S. economy?
The Japanese turned away from militarism after World War II, and most people here and in Asia think this was a good thing. If Japan were to commit more resources to the military, old nationalistic attitudes might be strengthened. Would a rearmed, nationalistic Japan be a more reliable partner in trade and security negotiations?
Americans are also deeply ambivalent about Japanese investment. While welcoming jobs such investment can bring, we fear foreign control and influence. Let Japan open an automobile factory and Americans celebrate, but Fairchild Semiconductor Corp. was clearly “off limits” to Japanese investors. In another instance, the United States welcomed Japanese investors who wanted to buy government bonds and then, by deliberately devaluing the dollar, essentially defaulted on our obligations. The Japanese will remember this although most Americans never gave it a thought. It is important that the United States develop and then stick to a clear and consistent policy on Japanese investment. Now that we have become a debtor nation, we need to learn how to be a reliable, responsible debtor so our creditors will keep lending.
There is another area in which we are sending mixed signals to Japan. We have repeatedly urged Japan to become more active in providing development aid to the Third World--loans, grants and investments. Yet we are unwilling to give Japan influence proportionate to its contributions. Are we willing to see Japan exercise a certain amount of control over the policies of the World Bank and the International Monetary Fund? Are we really ready for the expansion of Japanese influence--commercial and political--in Latin America, that a more active financial role for Japanese banks must imply?
In the early 1920s, Japanese society was torn between two groups. Liberals wanted to democratize Japan and align it with Britain and the United States. Militarists argued that Japan should chart its own course in the world and build an Asian empire. While Japanese politics hung in the balance, the U. S. Congress passed anti-Japanese legislation--the Exclusion Act of 1924, with its racist ban on Japanese immigration. The liberal, democratic forces in Japan were fatally weakened; the militarists claimed that the law proved the United States would never welcome Japan as an equal partner and started down the path of confrontation.
To some extent, U. S. frustration with Japan represents our frustration with our relative decline as a world power. In 1950, Europe and Japan were completely dependent on the United States. With each year, we are less able to impose our views on our allies and partners. This state of affairs presents all of us with complex new challenges. The world still needs American leadership, but we must learn to exercise that leadership in new, less domineering ways.
The search for improved relations with our allies and especially with Japan, the most prosperous and important of them all, requires us to redefine our own role in the world. Until then, we ourselves decide what we want, our negotiations and our relationships are likely to be confusing and unsatisfactory to all parties.
