Talking Trade Amid the Hubbub : U.S. bids to grab troubled Tokyo’s attention
The U.S.-Japan trade standoff is unfolding against a backdrop of continuing political turmoil in Tokyo. As Prime Minister Morihiro Hosokawa pushed for a voluntary market-opening program under growing U.S. pressure, he was distracted by a two-week effort to reshuffle his Cabinet, an effort he now has abandoned. To keep Tokyo focused on the trade problem, the Clinton Administration has raised the specter of reinstating the tough Super 301 trade order, which would allow the President to quickly impose sanctions.
Hosokawa wants to have a market-opening plan ready this month. So far, Tokyo is considering reducing its current account surplus to 2.8% of gross domestic product, down from an estimated 3.1% this year. That is unsatisfactory because it is not binding and does not take into account volatile exchange and interest rates.
As usual, a policy change depends on Tokyo’s bureaucrats, notoriously resistant to change. It is likely that in an attempt to placate U.S. trade negotiators they simply will repackage past “process” efforts to open markets. While that foot-dragging strategy worked for 12 years, it is unacceptable to President Clinton. However, Washington must be careful not to allow Tokyo to score public-relations points against this country by turning this controversy into a free trade issue.
In only one of 31 U.S.-Japan trade agreements is Japan committed to giving up a share of its market. Clinton understandably wants more, specifically “qualitative and quantitative measures of progress.” Tokyo has interpreted that as meaning numerical targets and cleverly cast the Clinton approach as “managed trade.” That characterization, unfortunately, has been accepted by some U.S. trading partners; and the Administration has done little to persuasively counter this criticism. Washington is seeking “results,” which it says are not the same as targets. U.S. Trade Representative Mickey Kantor recently described the goal as devising a “speedometer” to monitor trade, not a “speed limit” on trade.
Access to Japan is not a U.S. problem alone. In concluding his Washington visit this week, British Prime Minister John Major said Japanese acceptance of imports is “a matter of concern throughout the European Union.”
Tokyo may not like Clinton’s tough approach, but things could be worse for Japan. Congress is getting into the act. Rep. Richard A. Gephardt (D-Mo.) and Sen. John D. Rockefeller IV (D-W. Va.) introduced a bill requiring the Commerce Department to unilaterally set targets for foreign imports in Japan. That is managed trade.
Voluntary changes by Japan are preferable to imposing sanctions. If Tokyo truly views its relationship with the United States as maturing, it must grow to this challenge.
