Gephardt Backs Shift in Trade Strategy : Economy: Lawmaker calls for tough measures that would cause Japanese people to demand reforms from their own leaders.

House Majority Leader Richard A. Gephardt (D-Mo.) on Friday recommended a strategy shift in America’s efforts to erase its huge disadvantage in trade dealings with Japan.

Rather than negotiate directly with the governmental hierarchy in Tokyo to correct unfair trade practices, Gephardt called for tough countermeasures that would ultimately lead the Japanese people to demand reforms from their own government.

Gephardt, a key congressional proponent of aggressive U.S. trade policies, said he wanted to tap the emotions stirred by recollections of the attack at Pearl Harbor that brought the United States into World War II to launch a realistic debate on U.S.-Japanese relations.

“Americans now believe that Japan poses a greater threat to the U.S. than any other country,” Gephardt said in a speech sponsored by the Center for National Policy, a Democratic think tank.

He noted that Japan now accounts for more than $400 billion of the $1-trillion trade deficit the United States has accumulated since 1980.

“It’s time to deal with the truth,” Gephardt said. “Standard free trade theory fails to recognize the deep differences between and fundamental incompatibility of our economic system and Japan’s. Unless we change our ideas and our rules of engagement with Japan, these systems won’t be reconciled.”

As an example of the gulf between the American and Japanese economic systems, Gephardt cited the keiretsu system in Japan. The term refers to informal cooperative arrangements involving producers, bankers and government bureaucrats that are said to impede competition and foster protectionism against Japanese trading partners.

Gephardt stressed that the ad hoc nature of these arrangements has hindered American efforts to respond. “We persist in talking with the wrong people and we don’t understand the dynamics of power in the Japanese political and economic system,” he said.

“There is no governmental conspiracy and no master plan,” he said. “And because there isn’t, there is no one to negotiate with when a foreign country tries to deal with Japan. The only real base of influence is the Japanese people.”

To intensify pressure on the Japanese public, Gephardt reiterated previous proposals for action on both the domestic and international fronts--strengthening U.S. trade laws and using the General Agreement on Tariffs and Trade to curb unfair Japanese trade practices.

In addition, he suggested the possibility of linking congressional approval of forthcoming GATT legislation to a promise by the Administration to take action against the Japanese for violating GATT rules.

Gephardt acknowledged that corrective measures against the Japanese represent only one part of the broad effort needed by the United States to reassert its former dominance in world markets.

“The U.S. must get its own house in order,” Gephardt said. “We need a long-term economic growth strategy for restoring America’s economic capacity.”

Specifically, he proposed providing full funding of the Head Start program for disadvantaged youngsters, making it easier for middle-income students to attend college, upgrading worker training programs and strengthening the Commerce Department, the office of the U.S. trade representative and the National Security Council.

As another sign of the urgency of the situation, Gephardt called for revising last fall’s budget compromise so that money could be cut from the defense budget and used to pay for expanded efforts for education, training and research.