U.S. Deficit With Japan Hits Record $59.3 Billion : Trade: The jump of 23% last year prompts the Clinton Administration to renew its call for open markets.
The politically charged U.S. trade deficit with Japan grew to almost $60 billion last year, the worst showing on record, the Commerce Department reported Thursday. The news drew renewed calls from the Clinton Administration for the Japanese to open their markets.
The trade gap with Japan accounted for more than half the U.S. trade imbalance worldwide in 1993, with U.S. imports exceeding exports by $115.8 billion. The overall figure was 37% higher than the year before and the worst level since 1988.
Paradoxically, the surge in red ink occurred largely because economic conditions in the United States were better than those of most of the nation’s major trading partners. Americans had more money to spend on imported goods than did the citizens of other countries.
“We were in a steadily increasing growth phase during this period, and many of our trading partners were not,” said Laura D’Andrea Tyson, head of the White House Council of Economic Advisers. “As a consequence, one would see the trade imbalance deteriorate.”
Tyson said a deep economic slump in Japan contributed to the $59.3-billion deficit with Tokyo, the largest bilateral imbalance the United States has recorded with any country. The trade deficit with Japan was 23% higher last year than it was the year before.
The figures were especially explosive because President Clinton and Japanese Prime Minister Morihiro Hosokawa failed last week to resolve a festering trade dispute between the world’s two largest economies. The Administration has already threatened to impose sanctions because Japan failed to open its cellular telephone market to U.S. products.
Commerce Secretary Ronald H. Brown said the 1993 figures “underscore the need to push for open markets with our trading partners.”
He was especially critical of the deficit with Japan.
“This high trade gap does not benefit either the United States or Japan,” Brown said. “The deficit does support President Clinton’s strong commitment to concrete initiatives to improve access to the Japanese market.”
In Tokyo, Hosokawa and his top economic strategists promised to put together a package of measures intended to open Japan’s markets and avert a trade war with the United States.
Details of the package have not been completed. But the measures will focus on promotion of imports, deregulation, tougher anti-monopoly enforcement and fairer government purchasing.
Trade specialists in the United States say such steps would be welcome, but they say the Japanese have promised such measures in the past without having much impact on their chronic trade surpluses.
The U.S. trade deficit with China amounted to $22.8 billion last year, second only to the imbalance with Japan.
U.S. officials saw some hope for improvement in the coming months, noting that the trade gap for December was $7.4 billion worldwide, the smallest of the year. Tyson said non-government analysts had expected a monthly deficit in December to equal the average of about $10 billion for the previous 11 months.
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But other analysts were less optimistic. The National Assn. of Business Economists predicted this week that the trade deficit for 1994 will increase to $135 billion, and in 1995 to $137 billion.
The annual trade figures are closely watched as a barometer of the nation’s competitiveness in international markets. In theory at least, a nation must earn from exports the money it spends on imports. However, the United States seldom achieves that kind of balance. The last U.S. trade surplus was recorded in 1975.
U.S. exports increased 3.7% to a record $464.8 billion last year. But imports rose 9% to $580.5 billion, also a record.
U.S. exports to Central and South America exceeded imports from that region by $562 million, the only U.S. trade surplus with any region. Of that amount, the U.S. trade surplus with Mexico accounted for $155.6 million.
The U.S. trade deficit with the countries of Western Europe was $280 million last year. The previous year, the United States recorded a surplus of $6.4 billion with Western Europe.
The Bundesbank, Germany’s central bank, announced a half-point cut in its discount rate, to 5.25%, a step intended to push down interest rates throughout the German economy. As a result, the dollar gained slightly against the mark, a trend that is expected to slightly worsen the trade gap with Germany.
* TAKING ACTION
Japan says it will take “voluntary” measures to trim its trade surplus. D2
