Japan Wraps Gift Packages to Help Bush Back Home

While President Bush tours the Imperial Palace in the ancient capital of Kyoto today to begin his four-day visit here, Japanese officials, under Prime Minister Kiichi Miyazawa’s direction, are still busy putting together gift packages that Bush can take home as evidence of a successful trip.

“We have to give him something,” said Sony Corp. Chairman Akio Morita as he went about shaking hands of fellow executives at a New Year’s reception Monday. “Unless he (Bush) takes home something concrete, he will have trouble in the coming elections.”

Japanese clearly worry that the failure to placate Bush with trade concessions could mean greater American protectionism down the road, perhaps even under a Democratic President.

But while Japanese officials have labored over the last two weeks drafting measures to expand imports of everything from automobiles to paper and glass, few seriously believe that the measures will make much of a dent in America’s $41-billion trade deficit with Japan or do much to create American jobs as Bush has promised.

On Monday, Miyazawa himself rejected efforts by Bush and members of his Cabinet to link America’s recession to Japan’s trade surplus.

“The slow tempo of the economic recovery in the United States is due to household debts, banks’ reluctance to lend and high interest rates as a result of the government deficit,” Miyazawa told a small group of foreign reporters Monday.

And Japanese officials warn against assuming that a more open Japanese market will help create more American jobs. “We have strong doubts about the equation of U.S. unemployment and market access to Japan,” a Foreign Ministry official said, adding: “It is much too simplistic. The U.S. side needs to make more efforts to cut its deficit, increase competitiveness and improve education.”

When their talks begin Wednesday morning, Bush and Miyazawa will seek to hammer out two agreements. The first document, the “Tokyo Declaration,” will be a statement calling for a global partnership between the United States and Japan to deal with security, environmental and other global issues.

“It is incumbent upon us to create a new world order of peace and democracy from this Cold War era,” Miyazawa said. “We want to demonstrate to the world that the U.S. and Japan can manage their bilateral relationship, even as economic relations become more prominent in the post-Cold War era.”

But the critical part of the talks will focus on the second document, the “action plan” that will include Japanese promises to provide increased market access in a wide range of areas.

“For 40 years, Japan has benefited from the friendship of the U.S.,” Miyazawa said, explaining his decision to help Bush through his current turmoil. “We would like to be a friend in need.”

The key trade issue--and the most nettlesome one--under discussion will be automobiles. They account for roughly 75% of Japan’s trade surplus with the United States.

“We will double our efforts to see that American car makers sell more here,” Miyazawa said. Officials said Monday that Japan will offer to set a target for increased sales in Japan of American automobiles, now a paltry 16,000.

But a panel of Japanese automobile dealers in a press conference Monday presented little hope of boosting American auto sales here.

“I can’t help but wonder if U.S. auto makers have made serious efforts to find out about Japanese customer preferences,” said Kazumasa Goto, executive vice president of the Japan Automobile Dealers Assn.

He said oversized cars, wrong-side steering, low fuel efficiency and gear ratios and air conditioning not adapted to Japanese needs make American cars a poor buy.

“Japanese by their very nature prefer foreign products, but the (American) engines overheat and there is too much time when the car is in the shop as they wait to get parts,” said Isao Makino, a dealer who once headed Toyota sales operation in the United States for nine years and now handles the dealer association’s legal and tax matters.

He said the group will cooperate with the government on whatever is decided but that it opposes import targets and a lower consumption tax on imported cars as “discriminatory.”

He noted that 90 of the group’s 2,000 members sell foreign cars but that American auto makers had made no effort to approach them. “There has been no initiative on their part to come to our dealers and try to sell their cars,” he said.

Japanese auto companies also complain that they will have trouble meeting government demands to raise their targets for foreign parts purchases. They have already committed to increasing their purchases of American auto parts to $16 billion by 1994, double the 1990 levels. They say that even reaching that level will be difficult.

“If the parts are cheap and good, we will buy them,” Takashi Ishihara, chairman of Nissan Motor, said in an interview Monday. “But if they aren’t good, we aren’t going to buy them.

“I don’t think this approach is going to solve our fundamental problems in auto trade,” he added.

Ishihara is also puzzled by the absence of plans by the American chief executive officers of the Big Three auto makers accompanying Bush on his visit. “I don’t know what is going on,” he said. “Do you?”

What Japanese fear most is that America will eventually demand the kind of agreement that Japan has struck with Europe. It limits growth in Japanese market share there. But Miyazawa said Monday that he has no intention of agreeing to hold back Japanese auto exports to the United States.

He also promised weak support for Bush on efforts to break the impasse on the Uruguay Round of global trade negotiations. “I hope to do something to make GATT (General Agreement on Tariffs and Trade) a success,” he said, adding that the question of opening Japan’s rice market is a difficult political issue that should not be included in his talks with Bush.

Ironically, Japan may score the most points with Bush on measures requiring no sacrifice. A recent decision by the Bank of Japan to reduce the discount rate was largely a measure taken to bolster the sagging Japanese economy. But it may also stimulate imports, and it won praise from Bush. Measures to spend more on public works and to allow the yen rate to fall are other measures that may win praise in America but which Japan finds desirable for its own reasons.

Even if Bush’s trip does not result in dramatic gains, American executives in Japan welcome the attention the President is giving to trade issues.

Computer makers, for example, hope that Bush will help them sell to the Japanese government.

“What the President is doing is bringing visibility to the problems of trade,” said Ed Reilly, president of Digital Equipment Corp.’s Japan operation and head of the American Chamber of Commerce in Japan. “This trip demonstrates that he cares about trade.”