In Pursuit of Trade, Japan Ignores S. Africa Sanctions

In a rare public admission, Japanese Foreign Ministry officials acknowledged their embarrassment that Tokyo is now South Africa’s leading trading partner. Japan conducted $4.27 billion worth of business with Pretoria in 1987, a 20% increase from the previous year. These figures do not take into account indirect trade and licensing arrangements, which could double the value of the business ties.

The powerful Ministry of Trade and Industry (MITI) was infuriated with the Foreign Ministry for speaking to the U.S. press, exposing dissent within the government and fueling international anger. The government had been trying to polish its anti-apartheid image--primarily by wining and dining African diplomats and leading South African blacks--but without much success. Asia has become a gateway for South African sanctions-busters and Japan is regarded as a principal gate-keeper with an open door policy.

Initially, it appeared that the Japanese--who were first regarded by South Africa as “nonwhites,” then upgraded, in the late 1960s, to “honorary whites”--were in the forefront of international efforts to impose sanctions against South Africa. As far back as 1965, Japan banned direct investment. In 1985, following action taken by the United States and Western Europe, Japan banned Kruggerands and the sale of computers to South Africa’s military and police. In 1986, after the U.S. Congress passed the Comprehensive Anti-Apartheid Act, imports of South African iron and steel products were prohibited. South African tourist visas were denied and, in 1987, visas for businessmen dealing in banned items were disallowed.

But other developments now lead critics to conclude that these measures may be more tatemae (window dressing) than honne (the real thing). Areas of trade that really matter are not affected. Coal, for example, is excluded from the list of banned items on the grounds that it is essential for Japan’s national security. Yet U.S. negotiators have been pressing Japan for years to buy more U.S. coal--of which there is an abundant supply--to reduce the bulging trade deficit. Tokyo prefers to rely on Pretoria, where the resource is mined by cheap black labor.

In 1985, as U.S. negotiators pleaded with Japan to buy an extra million tons of coal, Tokyo bought one-fifth of South Africa’s coal exports. Last year, Japan acceded to South Africa’s request for continued purchases.

The ban on direct investment also has not prevented Japanese products from flooding the South African market. Licensing and franchising agreements permit the Japanese to export kits for local assembly by South African-owned companies--often with Japanese engineers as supervisors. Five years ago, Japanese goods began to compete strongly with U.S. products due to the dollar’s strength against the yen.

But even as the dollar fell, American sales did not rebound. Instead, U.S. firms began withdrawing in response to disinvestment pressures and the growing South African violence, creating an opportunity for the Japanese to exploit. Toyota, for instance, trebled its operating revenues last year and expects its sales to rise 10% this year.

Japan moved into sectors that the United States had traditionally dominated--mainframe computers, automated office equipment such as photocopiers and facsimile machines, chemicals and automobiles. Credit restrictions, visa limitations and other similar gestures have not impeded a flourishing business-as-usual relationship that has expanded as political repression in South Africa increased. Japan even flouted the ban on Kruggerands by increases of South African gold imports in 1986 for the minting of the Emperor Hirohito gold coin--with purchases channeled through third countries to minimize publicity.

The ban on imports of South African iron and steel products is similarly undermined by the impending sale of a $50- million high-tech steel plant to ISCOR, the Iron and Steel Corporation owned by the South African government. This secret project will save Pretoria $25 million a year in foreign exchange and make it self-sufficient in certain types of coated steels used by locally owned automobile manufacturers. News of it was leaked to the South African press in February. A representative of a major Japanese trading house was quoted recently by a Kyodo news agency reporter, “We have to trade with South Africa inconspicuously to avoid being criticized.”

Japan’s South Africa policy is not intentionally racist, but it is an outgrowth of a one-dimensional preoccupation with trade and a product of traditional insularity. The situation is reminiscent of the problem of the Vietnamese boat people, for despite Japan’s position as Asia’s dominant economic power, it accepted only 3,000 of these refugees--and those only under great international pressure. This was a natural consequence of Japan’s centuries-old emphasis on the importance of its own homogeneity.

Japan’s disregard for South Africa’s explosive racial conflict, therefore, should not be surprising. As Kazuo Nukazawa, a director of Keidanren, Japan’s most powerful business organization, said, “The moral consciousness is not that keen.” Underscoring this point, a MITI official said there is no reason for Japan to impose stronger sanctions against South Africa simply because it is No. 1 in trade figures. That view seems to be supported by the ruling Liberal Democratic Party; several key members belong to the Japan-South Africa Parliamentary Friendship League that advocates closer ties based on the reality of business.

The big price Tokyo may have to pay stems from its worsening image in the United States. To many Americans, Tokyo’s South Africa policy tends to confirm the stereotype of a country that places profit above all.

Existing congressional legislation empowers the President to limit imports into the United States from any country that allows its businesses to take commercial advantage of U.S. sanctions. Congress could go further by requiring automatic sanctions against such offenders, citing effective precedent. Last September, Israel was pressed into reducing ties with South Africa after Congress made clear it might invoke a provision that cuts off aid to countries violating the arms embargo. A similar measure could cut off trade to countries taking advantage of U.S. sanctions.

For years, supporters of Japan and free trade advocates have successfully withstood pressure for broad restrictions on Japan’s access to U.S. markets. Now it appears that Tokyo’s inability to transcend trade imperatives and to be more responsive to international opinion may bring down on Japan the kind of response these supporters may no longer be able to forestall.