Japan announced the first fall in its annual trade surplus in five years Tuesday, but the nation's surplus with the United States for all of 1987 and for the month of December rose, Finance Ministry figures show.
In fact, the overall trade surplus decline was due mostly to a rise in the price of oil--Japan's biggest import item--rather than a surge of imports from its major trading partners.
Also, Japan's surplus with its Western European trading partners rose sharply, a factor that could lead to heightened tensions with European Community nations at a time when the picture with the United States may be poised to improve.
Japan's 1987 total trade surplus of $79.83 billion was nearly 4% lower than the 1986 figure of $82.74 billion.
For the month of December alone, the surplus narrowed to $8.60 billion from $8.72 billion a year earlier, the ministry said. In November, the surplus was $4.74 billion.
Because crude oil prices almost doubled during the year, from a low of $9 per barrel in 1986, the import account for 1987 soared in dollar terms. Japan imports most of its oil, and that commodity makes up about a third of its import bill. Oil products from the Middle East alone jumped 69.8% in value over 1986 prices.
But the oil factor is not stopping Japanese officials from predicting a bigger fall in the surplus of about $10 billion in 1988. "We believe the trade surplus is shrinking," a ministry official said.
Officials said they believed that this would help reduce world trade tensions, especially with the United States.
The surplus with the United States in 1987 was $52.14 billion, slightly higher than the $51.40 billion in 1986.
For the month of December, the surplus with the United States grew to $4.91 billion from $4.74 billion a year earlier. In November, it was $4.20 billion.
The increases from November caused some stir on world markets, sending the dollar moderately lower against the yen and dampening prices for stocks and bonds in the United States.
Figures Can Mislead
But analysts pointed out that the markets were especially vulnerable to a fall anyway, after the strong gains that followed Friday's report showing a 25% plunge in the United States' trade deficit for November.
Several also said it was a mistake to try to draw conclusions from month-to-month figures, or even same-month figures from different countries.
For example, while Japan's trade figures are seasonally adjusted, U.S. figures are not.
In addition, Japan's figures actually precede U.S. figures by about a month because exports take about that long to reach the United States, where they are classified as imports by U.S. officials.
One Commerce Department economist also noted that heavy shipments of automobiles by Japan in one month can have a big impact on the overall monthly figure--masking what could be a vastly different underlying trend.
Yet the figures still made a leader of the ruling Liberal Democratic Party of Japan anxious to settle trade issues with the United States. Former Foreign Minister Shintaro Abe, now LDP secretary-general and the second most powerful man in the party after Prime Minister Noboru Takeshita, told a news conference: "We could lose U.S. trust in Japan unless we settle these issues now."
Anxious for Resolution
Disputes over imports of farm goods and access to public works construction projects were major topics of discussion during Takeshita's visit to Washington last week.
"We must settle the issue of opening Japanese public works projects to foreign construction firms in the next two or three months," Abe said.
He said such a move was likely to be painful for Japanese industry, but added: "We need a courageous choice."
Abe said Japan would come up with a decision on farm products by the time the General Agreement on Tariffs and Trade meets next month. A GATT panel has recommended that Japan scrap import quotas on 10 farm products.
The Liberal Democratic Party, which has been in power since its inauguration in 1955, depends heavily on votes of farmers and on financial support from construction companies, political analysts said.
While Japanese export trade with the United States may be facing a resolution, sales to the European Community are rising, said EC Ambassador to Tokyo Andreas Van Agt.
Japan's surplus with the European Community grew more than 20% to $20.12 billion in 1987, from $16.69 billion in 1986.
The switch in Japan's trade surplus from the United States to EC nations is one of the factors disguised by the fall in the overall surplus. Although the yen has more than doubled in value against the dollar in two years, it has barely moved against the major EC currencies. As long as Japanese goods can remain priced competitively in Europe, sales to that region will remain strong.