U.S. Should Press Tokyo for Import Targets, Panel Says
A high-level business panel recommended Thursday that the United States abandon its traditional approach to trade relations with Japan and instead press Tokyo to meet industry-by-industry targets for increasing its import buying--on pain of U.S. retaliation.
The committee, which serves as the principal business advisory group to U.S. Trade Representative Carla A. Hills, declared that the new approach is needed because the removal of most of Japan’s formal trade barriers in recent years has not spurred enough import buying.
It said most of the barriers now faced by U.S. business are the result of cultural differences, such as loyalty of Japanese conglomerates to their long-time suppliers, and cannot be resolved by traditional “piecemeal” barrier-lowering by government.
The panel’s 121-page report conceded that its prescription--which was coupled with a parallel call to reduce the budget deficit--would amount to a major departure from traditional U.S. policy and would come close to a system where trade is “managed” by governments.
But it asserted that “given the different structures of the two economies, trade policy solutions lie somewhere between free trade” and a “managed trade” system. It said trade policy must become “results-oriented,” designed to achieve specific goals. The group, headed by James D. Robinson III, chairman of American Express, is known formally as the Advisory Committee for Trade Policy Negotiations and is set up under U.S. trade law to provide business leaders with a voice in setting trade policy.
‘Managed-Trade’ System
Thursday’s report marks the first time that the panel has formally recommended abandoning traditional free-trade objectives in relations with any country and moving toward a managed-trade system. The recommendation is intended to apply only to trade with Japan.
Hills, who has been in office for barely two weeks, declined to comment on the specific recommendations contained in the report. A spokesman for her office said Hills would study the proposal.
Under the proposal, trade negotiations with Japan would continue in a traditional fashion wherever formal trade barriers--such as import quotas or inequitable government regulations--exist in either country. Officials would meet and negotiate a solution.
But where the barriers stem from differences of economic structure or culture--such as the reluctance of Japanese companies to buy imports--then the two sides would agree on medium-term targets for increasing import buying in these industries and then take steps to meet them.
The strategy implies that the Japanese government would seek to prod Japanese companies into buying more imports by issuing “administrative guidance” from the Ministry of International Trade and Industry and other forms of pressure that are common in Japan.
Budget Deficit Cut Urged
At the same time, the United States would seek to “enforce” those targets by threatening to impose tariffs or other penalties if the agreed-upon goals were not met. The approach has been recommended previously by some private analysts but is regarded skeptically by others.
The proposal for establishing new industry-by-industry targets is only one of several suggestions that the panel included. It also urged reducing the U.S. budget deficit, both to slow import buying in the United States and to dampen demand at home so that industry can export more.
And it urged Japan to stimulate demand at home, in part by overhauling its own economic structure. It urged both countries to explore ways to change their tax structures to enhance their broader economic goals.
The panel specifically rejected several other frequently mentioned proposals, including establishing broad targets for reduction of the U.S. and Japanese trade imbalances and negotiating a free-trade arrangement similar to that recently signed with Canada.
