Japan Says Trade Surplus With U.S. Declined by 16%


Japan’s trade surplus with the United States fell by 16% last year, reflecting the first decline in exports to the United States in eight years, Japanese officials said recently.

Koji Watanabe, Japan’s deputy foreign minister, called the decline “a success story” in U.S.-Japan economic relations. But American officials remained as disgruntled as ever and resurrected complaints about a continuing $30-billion deficit with Japan in automotive trade.

U.S. Under Secretary of State Richard McCormack said recession in the United States was “the primary factor” behind the nearly $7-billion overall decline in the imbalance. The imbalance could rise when the U.S. economy starts growing again, he said.

McCormack also complained that the “remaining imbalance is still staggeringly high.”


According to Japanese figures, the imbalance fell to $38 billion last year from $44.9 billion in 1989. U.S. figures for 1990 have yet to be announced, but McCormack predicted here last Friday that red ink in trade with Japan was likely to fall to $40 billion when a final accounting is available.

U.S. and Japanese figures on the imbalance differ because of different factors included in the value of imports and exports. For example, both Japanese and American trade statistics exclude the cost of shipping and insurance in calculating export values but include both in determining the value of imports.

Both McCormack and J. Michael Farren, U.S. under secretary of commerce, declared that a dramatic reduction in the trade imbalance with Japan could occur only if Japanese business practices undergo structural reform.

Farren noted that the imbalance in automotive trade has remained virtually unchanged at $30 billion, even as Japanese companies have increased their production at U.S. plants to 1.3 million cars a year. The Japanese have decreased exports of automobiles to the United States, he said, but the value of exports of automotive parts has increased sharply to $10 billion. Japanese auto makers insist upon relying on their own “in-house” components, rather than purchasing parts in the United States, he said.


In addition, Japanese manufacturing firms, in general, “simply don’t have the tendency to import manufactured products,” he added.

“You’re not going to see a $40-billion imbalance come down dramatically--and you certainly aren’t going to see it come into balance--when you have these systemic problems remaining in place and . . . you have the automotive sector continuing to grow in imbalance, with no prospect of it declining even with the advent of a significant assembly of automobiles in the United States,” Farren said.

Watanabe, speaking during a joint news conference with McCormack and Farren, said Japan had made “great efforts to reduce the trade imbalance--and we want the United States to evaluate those efforts positively.”

Farren, however, said the Japanese missed the point of American complaints by focusing on a decline in their exports.

“Declining Japanese exports to the United States is not what anybody is looking for. We hope Japanese exports continue to do well in the American market. We are not looking for (Japanese exporters) to sell $1 less. What we are looking for is . . . an increase in U.S. exports to Japan . . . for American manufacturers to have an equal opportunity in this market and to sell a whole lot more than we do today,” he said.

Watanabe noted that American exports to Japan did, in fact, grow by 8.4% in 1990.