Aftermath of a Scandal : U.S.-Japan Economic Relations Not Expected to Change in Wake of Takeshita Resignation

The resignation of Japanese Prime Minister Noboru Takeshita is not expected to have an immediate impact on U.S.-Japanese trade and economic relations, but it could slow Tokyo’s bid to exert more global economic leadership, officials and strategists said Tuesday.

The most pressing dispute between the two countries--whether they can work out a new deal for developing the advanced FSX fighter plane that will mollify critics in Congress--already is near a decision and is unlikely to be derailed, U.S. officials say.

The second-biggest squabble on the U.S.-Japanese negotiating table--whether the United States should target Japan for possible retaliation under the new Omnibus Trade Act--may be affected only marginally.

U.S. strategists say the fact that Japan may be more vulnerable politically during the transition to a new government may make some U.S. policy-makers more leery of putting Tokyo on the list of possible targets, but still it is almost certain that Japan will be included.

Analysts say that, if the Administration were to omit Japan from the trade bill list, it would face a firestorm from Congress that some fear could get out of hand. “The main difference this could make would be in the way the complaint might be worded,” one strategist said.

And James Abegglen, a Tokyo-based economic consultant, pointed out that most of the issues the two sides are discussing involve American complaints about trade problems, not “positive, constructive new proposals” that would require lengthy high-level negotiations.

Many pending disputes between the two countries can wait until a new government takes shape.

All in all, the Takeshita resignation “will have relatively little, if any, impact on U.S.-Japanese relations in the near-term,” said Harald B. Malmgren, a Johnson Administration trade official who now is a consultant with broad contacts in Japan.

At the same time, having a transition government may make Japan somewhat less aggressive--at least temporarily--in the global economic and political arena.

Tokyo may end up moving more slowly to reduce Latin America’s debt. Washington has been looking to Japan for help in financing Treasury Secretary Nicholas F. Brady’s new plan for reducing the heavy debt burdens of Third World countries.

Also, Japan may be less eager to help prop up the dollar. The Japanese central bank has already expressed reservations about assertions by Washington that Japan should buy more dollars to keep the U.S. currency from plummeting. A falling dollar could spell more inflation in the United States.

The Japanese have been serving notice recently that they want a wider say in the management of global economic problems commensurate with their new economic power. Tokyo proposed a Third World debt-relief plan of its own last year and has offered new trade proposals, too.

Now that could ebb a bit. “You’re going to have a series of weak leaders who aren’t going to be able to confront the important international issues,” Gerald Curtis, director of the East Asian Institute at Columbia University in New York, told Reuters.

To be sure, the Takeshita resignation could end up having some impact on bilateral issues. If disputes such as the FSX fighter deal end up requiring a tough new political decision, a caretaker government may be hard-pressed to come up with one, U.S. officials conceded.

Even so, many U.S. analysts--Malmgren included--said they expect Takeshita to remain an unseen power behind the new prime minister, no matter who he might be. Kakuei Tanaka, Japan’s prime minister in the early 1970s, ran the country after being deposed in a scandal in 1974.

If Takeshita continues to be the country’s chief decision-maker--as is expected--then “the same policies will continue,” Malmgren insisted.

Michael B. Smith, another former U.S. trade negotiator, warned that U.S. policy-makers should not allow themselves to be taken in by Japanese appeals that decision-making is impossible during the transition.

“There always are changes in governments,” Smith said. “It would be impossible to conduct a coherent trade policy if these changes became elements in working out long-range policies.”

But Yoshio Okawara, former Japanese ambassador to the United States, asserted that Takeshita’s resignation will not be overriding. “It won’t change at all how we pursue friendly trade ties with the U.S,” Okawara told a news conference here.

RELATED STORY: Part I, Page 10