NEWS ANALYSIS : New Conflict Over Trade May Fray U.S.-Japan Ties

Its proposals may be wrapped in the gauzy language of international diplomacy, but the Clinton Administration is pressing Japan to make an unprecedented series of commitments to reduce its swelling trade surplus and open its cloistered economy to outsiders.

The Administration’s strategy, presented to Japanese negotiators during closed-door discussions Friday and Saturday in Washington, is part of a new, more confrontational relationship between two economic superpowers that increasingly view each other as rivals.

As Administration officials press ahead in coming weeks with efforts to bring Japanese economic and trade policies into greater balance with the rest of the world, they are “trying to discover a new road, “ in the words of John Zysman, director of the Berkeley Roundtable on the International Economy.

For the United States, that road appears to be leading in the direction of what critics call “managed trade.” Although it says it is seeking “benchmarks,” not quotas, Washington clearly wants specific, detailed pledges by the Japanese to buy more U.S. goods.

For Japan, it is a road to be avoided at almost any cost. Using unusually blunt language, Japanese officials have adamantly refused to consider any kind of numerical import targets and have begun lobbying their Asian neighbors to join them in opposing the new U.S. approach.

The increasingly combative nature of the U.S.-Japan relationship could occupy center stage during an international economic summit in Tokyo next month, particularly if the momentum of last week’s talks falls off and an agreement on the economic framework is not achieved beforehand.

But officials from the U.S. and Japanese delegations indicated after the first round of talks that they saw no reason they would not achieve an agreement in time for Clinton and Prime Minister Kiichi Miyazawa to announce it in Tokyo.

The fraying of the Washington-Tokyo connection reflects the arrival of a new generation at the upper reaches of U.S. policy-making, one that has come of age driving Hondas, listening to Sony Walkmans and watching as Japan systematically invaded markets once dominated by U.S. products.

It also reflects a dramatic shift in the U.S. perception of Japan, from that of a strategically placed ally anchoring the West’s anti-Soviet deterrent in the Pacific to that of an economic rival dubbed “Japan Inc.”

Indeed, as Japan’s strategic cooperation has become less crucial, the value placed on economic cooperation has grown. And with it has grown the political imperative for U.S. officials to tackle economic problems--or to appear to tackle them--by standing up to Japanese intransigence.

“We’re putting the economy first,” a senior Administration official said last week of the evolving U.S.-Japanese relationship. “For many years, security concerns were paramount. That’s not the case with President Clinton.”

During his presidential campaign, Clinton repeatedly insisted that economic policy and foreign policy intersect and cannot be treated as two distinct elements. He has also acknowledged that no other single country looms larger in the U.S. view than Japan.

Last week’s talks in Washington, which will resume in Tokyo later this month, tackled head-on the huge challenge of reframing the way the two countries do business with each other. The intention is to bring Japan’s still-growing global trade surplus--a staggering $132 billion in 1992--toward something closer to a balance point over the next three or four years.

The shift, if achieved, would produce a clear benefit for the United States and Japan’s other trading partners. Increased sales to Japan, along with reduced purchases of Japanese goods and services, would translate into more jobs in the United States and other manufacturing nations.

Although it is trying to avoid mandating specific numerical targets, the United States would like to see Japan cut its trade surplus roughly in half in relation to the total value of its economy.

It also wants Japan to significantly increase its purchases of foreign-made goods.

In addition to the broad goals, the United States is pushing for a series of more specific commitments in five areas: Japan’s auto and auto parts industry, government purchases by Japan, compliance with existing trade agreements, regulatory reform and the economic integration of U.S. companies into the tightly controlled world of Japanese commerce.

The Clinton Administration wants the Japanese to accept tangible benchmarks for assessing progress toward meeting the objectives.

In each arena, the existing situation is skewed heavily in Japan’s favor; in the realm of government purchases, according to one U.S. estimate, only 0.07% of Japanese government procurement goes to foreign companies.

“You don’t have to be a genius to figure out there is a problem here,” U.S. Trade Representative Mickey Kantor said.

Administration officials have said no specific retaliation is contemplated if benchmarks are not set and eventually met. Yet in the same breath, they have pointed out that inexorable political pressures would force some sort of formal reaction if there is no progress or if Japan balks at U.S. requests.

Tokyo has made it clear that it will strenuously resist the U.S. campaign, vowing to fight any effort to replace free trade with managed trade. Some analysts say they believe that neither Miyazawa nor Clinton has the political strength this spring to allow a strategic compromise in such a politically sensitive area.

The road on which Clinton has embarked is not without risk.

“It is easy to blame the Japanese for our problems,” said a foreign-policy expert who played a central role in the George Bush Administration. But, he warned, in doing that, Clinton and his advisers are “just kind of ignoring the strategic relationship. That concerns me more than anything. They are treating the economic relationship as the whole relationship. That is very dangerous.”

He said that kind of policy ignores the possibility of instability in China, which is “on the verge of a transition, if not a power struggle” as a new generation comes to power, as well as “what games the Russians will play” over returning to Japanese control four northern islands occupied by the Soviet Union at the end of World War II and still in Russian hands.

“The key factor before has been that economics are a pain but it was one part of the relationship,” he said, adding that the Clinton team, in ignoring broader strategic concerns, is offering a “tactical reaction to the pressures of the moment.”

U.S. leaders are under considerable pressure to solve the nation’s economic problems, but the potential political gains of blaming Japan for those problems are uncertain.

The U.S.-Japanese relationship inspires ambivalent feelings among most Americans, despite the growing attention paid to the developing tensions and the economic rivalry.

As measured by public opinion surveys, most say they believe Japan is a threat to the United States, but they describe the relationship as basically good and most remain favorably disposed toward Japan.

But polls over recent years have turned up a trend suggesting that many Americans’ views of Japan are turning sour. One Gallup poll last year--taken around the time of the 50th anniversary of the Japanese bombing of Pearl Harbor--put the public’s rating of Japan lower than its ratings of Germany, Canada or Russia.

That may explain, in the words of Shane Green, coordinator of a study of U.S.-Japanese relations that is about to be published by the Carnegie Endowment for International Peace, the tendency of some officials to produce anti-Japanese sound-bite material “for cheap, domestic political purposes.”

But the situation is complex.

“The relations between the two countries, based on word exchanges and threats and demands on our part and reactions on the part of the Japanese, are in a most difficult stage,” said Mike Mansfield, the former Senate Democratic leader and U.S. ambassador to Japan during the Jimmy Carter and Ronald Reagan administrations.

“I don’t think much of benchmarks or results-oriented or managed trade,” he said. “We have to keep things in focus, get down to bedrock and operate as equals.”