PACIFIC PERSPECTIVES / JAPAN : A Charade That We’ve Played Before : The latest U.S.-Japan agreement is just one of many heralding a “new era.” And like those before it, this one will do little to reduce the deficit or eliminate trade friction.

Trumpets blared on April 5 to celebrate the historic moment when the United States and Japan announced agreement to remove “structural impediments” that had been identified as the villains causing the endless friction between the two nations.

Among a long list of “successfully” negotiated pointers, it was announced that Japan would increase spending on infrastructure projects, strengthen penalties for antitrust violations, make administrative guidance procedures transparent, simplify its Byzantine distribution system and open its markets for telecommunications equipment, supercomputers and satellites. At the same time the United States agreed to reduce its budget deficit, increase savings and further increase U.S. competitive power.

In Tokyo, Prime Minister Toshiki Kaifu went on television to make a Churchillian plea for his people to bear the “pain” of an agreement that, if it has any effect at all, will improve the lot of the Japanese consumer. In Washington, Deputy Trade Representative Linn Williams was shown on news bulletins claiming that the deal was unprecedented because it marked the first time that Japan had “gone on record” that barriers existed. His boss, U.S. Trade Representative Carla A. Hills, boasted that this was “the first time the government of Japan has gone through such a process and committed to remove barriers to trade.”

Except for all the other times. You do not have to have a very long memory to recall the “unprecedented” television appearances by Prime Minister Yasuhiro Nakasone in 1985, in which he said that Japan had agreed to an “action program” that was going to really open its markets. A high-ranking State Department official said that Japan was going to go through its biggest change since the Meiji restoration of the 1860s. This was after six previous “market-opening packages” and the so-called MOSS, for market-oriented sector specific, talks. All were firsts, all were unique. All heralded a new era.

It is a deceit. The negotiators may appear to be negotiating, but in fact they are collaborating to develop a formula that can be sold in America as success in opening the Japanese market and in Japan as a dose of bitter medicine that will not really change things but that must be swallowed to get the Americans off the collective Japanese back. Were it not so serious it would be funny.

The inflated expectations cannot possibly be fulfilled. Even if the agreements were clear and expressed in concrete terms, Japanese prime ministers are just not strong enough to cut deals and direct their implementation straight off the plane. And the agreements are anything but clear. Take the one that announced the opening of Japan’s telecommunications market. Presented as a great success, it actually contains less substance than had been achieved after talks in 1985. The situation with supercomputers is similar. Other parts of the documents are full of terms such as “best efforts,” “strengthen,” “improve,” “study” and “review”--all the telltale signs of papered-over disagreements on key points of negotiation.

In lieu of a clearly defined measure of success, the de facto test becomes the extent to which America’s trade deficit with Japan decreases. The public and Congress are led to expect that as a result of market opening in Japan, U.S. exports will surge and the deficit decline.

But that could only occur if the measures contemplated would lead to a substantial reduction of Japan’s propensity to save and of America’s propensity to consume. As long as Japan produces more than it consumes and America consumes more than it produces, the first will have a surplus and the latter a deficit. Nothing in this latest agreement will even come close to changing the saving and consumption habits of either country--and the negotiators on both sides know that.

The real problem is one of trade friction, not the trade deficit. When Japan targets an industry such as semiconductors, autos or supercomputers, there is a tendency for Japanese industry to displace and ultimately to erase American industry in the same sector. There is dislocation for managers and workers and consequent pain for their communities. Such industries may be important to national defense and their disappearance increases America’s dependence and potential vulnerability. Finally, such industries may be precisely those high-technology ones that America has traditionally thought of as its keys to future wealth and to staying at the leading edge of science and technology. The phenomenon of Japanese displacement appears to many to call into question America’s future wealth-producing and strategic role.

It is this problem that the trade talks are really trying to solve, but no one will say so because that might imply a kind of industrial policy concern for “picking winners and losers,” or at least for avoiding losers, which is anathema to Bush Administration economic officials. Thus, without admitting it, U.S. trade negotiators try to preserve key industries by attempting to make Japan’s economy a replica of the U.S. economy through broad procedural reforms.

But nothing in this agreement is going to make Japan into a Little America anytime soon. In the meantime, the general approach is a clumsy, inadequate way to deal with sectoral issues.

With neither the size of the trade deficit nor the causes of the trade friction likely to be altered significantly by the latest round of talks, it is almost certain that they will be perceived as a failure in the not too distant future. This will lead to calls for sanctions and for getting tough with a duplicitous Japan. In truth, however, it will not have been Japan that was deceitful, but rather the long continuance of the charade of U.S.-Japan trade negotiations.