Japan to U.S.: Put Your Trade House in Order

Japanese officials told the United States on Friday to “put your house in order” and improve the competitiveness of American industry as a third round of talks aimed at dismantling impediments to U.S.-Japan trade closed on an acrimonious note.

The officials told a U.S. trade delegation that “much more can be done” to reduce the U.S. budget deficit, a Foreign Ministry official said.

S. Linn Williams, deputy U.S. trade representative, told reporters that the Americans now find themselves “frustrated and concerned” in connection with the so-called Structural Impediments Initiative.

He said a letter President Bush sent to Prime Minister Toshiki Kaifu on Monday and a statement issued here Friday by Defense Secretary Dick Cheney were part of a coordinated process of trying to persuade the Japanese leaders to make a commitment to reforms.

Bush urged the prime minister to make an extra effort to push ahead with the SII talks, and Cheney warned that trade troubles threaten the entire U.S.-Japan relationship.

Williams underscored what he called “the unusual aspect of a secretary of defense raising a trade issue as a matter of political concern.”

He said the final SII report, scheduled for July, “will have a major influence on economic relations between the United States and Japan, and that relationship will affect overall relations.”

Assistant Treasury Secretary Charles Dallara, another member of the U.S. delegation, warned that failure could cause the Administration to “lose control” to Congress in economic dealings with Japan.

Williams said the Japanese negotiators lacked “sufficient political guidance” to proceed with proposals for reform, but the Foreign Ministry official, who asked not to be identified by name, said that was not so.

“The prime minister is very much committed to move this exercise forward,” he said, “and I think you’re going to see more leadership.”

Japan, he said, shares the Americans’ “sense of urgency.” He said the Japanese “are a very undramatic people; we take actions in an undramatic way, but dramatic results occur.”

He said despite the U.S. deficit in trade with Japan, which amounted to $49 billion last year, U.S. exports to Japan rose to $44 billion, double the $22 billion of 1985. Moreover, he said, Japan’s global trade surplus declined last year, to $77 billion from a peak of $96 billion in 1987.

“We are heading in the right direction,” the Japanese official said. “The economic figures are showing a very encouraging trade. The problem is whether we can affect the political and psychological problems.”

He said the Japanese taking part in the SII talks emphasized that the Americans “need to put your house in order concerning the (budget) deficit and improve competitiveness.”

“Otherwise,” he said the Americans were told, “you can’t expect much of an improvement in your balance of payments.”

He said the Japanese also registered a complaint about American businessmen: “The first thing they do when they make a profit is to increase wages--particularly those of the executives.”

Meanwhile, Eishiro Saito, chairman of Keidanren (Federation of Economic Organizations), complained that the United States was going too far in the SII talks.

“I don’t know whether the expression ‘intervention in domestic affairs’ is appropriate,” he said, “but the United States is becoming one-sided in demanding revision and abolition of Japanese laws.”

Williams said there will be one more round of talks before an interim SII report is issued in April and that there will be a series of meetings on specific issues in addition to the main discussions.