The Storm Clouds Over Tokyo
Structural Impediments Initiative is a big mouthful for a big problem.
It refers to the sometimes emotional U.S. belief that a lot of Japan’s markets are closed to American products not because of tariffs or quotas but because of informal obstacles inherent in Japan’s economic and cultural systems. With Japan’s parliamentary elections out of the way, market-opening talks with the United States resume this week in Tokyo. Japanese negotiators, though, won’t be wholly on the defensive. They’ll argue that America should look to its own structural impediments to explain its seemingly intractable $49-billion trade deficit with Japan.
What’s shaping up may be one of the bumpier rides in a trade relationship that’s never been easy.
Prime Minister Toshiki Kaifu, fresh from leading the governing Liberal Democratic Party to a significant electoral victory, will have his work cut out for him over the next few months. Trade frictions always strike sparks that threaten to ignite the political underbrush, and hanging over the pending round of talks is a series of congressionally set deadlines and threats of retaliation if alleged unfair practices aren’t changed. In addition to so-called structural impediments, the United States wants Japan to open its markets more fully to American wood products, supercomputers and satellites. Some think Kaifu could be pushed aside in favor of an LDP leader with more international experience if the talks go badly and relations with Washington deteriorate. Former Foreign Minister Shintaro Abe is mentioned as one possibility.
U.S. officials charge, among other things, that Japan’s grossly inefficient distribution system, land policy and officially tolerated corporate collusion all work to keep important sectors of the economy closed to American products and services, costing U.S. exporters up to $30 billion a year. The Japanese respond that the enormous U.S. budget deficit, which soaks up potential investment capital and helps keep interest rates high, along with a low personal savings rate and an inefficient work force, are responsible for making U.S. products less competitive.
Abundant evidence supports the claims of both sides, but it’s clear as well that the kinds of basic changes needed to ameliorate the problem won’t come soon. That increases the danger that Congress could insist on applying the kind of punitive measures that might provide short-term political satisfaction--Japan-bashing is always tempting in an election year--even at the longer-term cost of eroding a vital relationship. It will take a lot of statecraft on the part of the trade negotiators to keep that unwelcome prospect from developing.
