PERSPECTIVE ON U.S.-JAPAN RELATIONS : Cool the Rhetoric and Get Serious : The two nations comprise 40% of the world’s GNP; work on cooperation to chart new course for 21st Century.

As the first U.S. President born after World War II and the first elected after the end of the Cold War, Bill Clinton faces the challenge of transforming an asymmetric, deteriorating and outmoded relationship with Japan into one that is genuinely equal, constructive and befitting the 1990s and beyond.

Japan itself can contribute to this long-overdue change, but for the United States, at least seven actions are imperative.

* Formulate a Japan policy: Japan is too important to forget each time the trade deficit dips or a Bosnia erupts. Implementing a national competitiveness strategy is a necessary condition to deal with the “Japan problem.” But even if the United States had no federal budget deficit, the highest saving and investment rates in the world, the best education and work force training system in the world, etc., these alone would be inadequate to address the profound challenges posed by Japan. What is needed is an explicit, coherent and strategic policy focused on Japan.

* Recognize that Japan is different: Economic orthodoxy to the contrary, Japan is different from the United States in its political economy, more so than any other advanced industrialized country. U.S. policy must take account of these differences--not “unfairness”--in market structure and conduct, the role of the government, the idea of competition, the value attached to domestic control of manufacturing, the desire for self-sufficiency and the deep distrust of foreign suppliers--rather than assuming, as U.S. policy has since 1945, that Japan’s economy will automatically come to resemble America’s.

Sony Chairman Akio Morita asserts that Japanese companies expand market share through cut-throat pricing, underpay and overwork their employees, pay meager dividends to shareholders, neglect the environment and make insufficient philanthropic contributions.

Given these differences, negotiations with Japan must focus on results, not process and procedure--no matter how alien this may seem to American notions of how “the market” should operate. Furthermore, such futile efforts to “remake Japan” as the Structural Impediments Initiative should be abandoned.

* Integrate politics and economics: In the post-Cold War world, the United States can no longer afford to bifurcate Japan into two countries--one, a trusted political ally; the other, an economic rival competing for world markets. Japan needs to be dealt with holistically as the powerful nation that it is, one that routinely plays off the State Department, Defense Department and National Security Council--who see Japan as a faithful ally--against the Commerce Department and office of the U.S. trade representative--who view Japan as a challenge if not a threat.

* Consider the regional and global framework: Japan’s economic power is too great and its political power too ascendant to consider it in isolation from the rest of Asia and a broader international context. We need a sophisticated, realistic and strategic analysis of Japan’s growing role in the world and what it means for American interests. For instance, the U.S. security presence in Asia cannot be considered apart from the obvious economic benefits Japan reaps from it.

* Cool the rhetoric while solving problems: During the past decade, the two governments have remained friendly while public rhetoric has grown hostile. What we need is candid problem-solving negotiations coupled with a public emphasis on the cooperative aspects of the relationship.

* Plan and shape the future: The United States should establish alternative scenarios of how the relationship may evolve over the next five, 10 and 20 years. While consciously trying to shape the future in light of American interests, we should forecast areas where the two countries can cooperate, where we will compete and where we are likely to conflict. The aim should be to maximize areas of cooperation, ensure benefits from competition and minimize areas of conflict.

* Utilize expertise on Japan: The United States needs policy-makers who understand Japan--its language, history, psychology, politics, economy and, above all, business practices. As is the case in most other sectors of American society, the government’s Japan expertise is woefully inadequate. Japan must be taken seriously enough to be dealt with by Americans who know that country, just as Japan has the good sense to utilize government officials and business people knowledgeable about the United States.

With the United States and Japan comprising 40% of the world’s gross national product, how our two nations identify problems, resolve differences and work together has profound implications for the international system. By adopting the seven precepts outlined above, the Clinton Administration has a golden opportunity to create a new and truly constructive U.S.-Japan relationship as it prepares America for the 21st Century.