Japan’s Trade Surplus With U.S. Surges by an Unexpected 30.9%
Hopes for easing U.S.-Japan tensions suffered another blow Friday with the release of statistics showing an unexpected surge in Japan’s trade surplus with the United States.
The report of a 30.9% surge in the current-account surplus for January came as Prime Minister Morihiro Hosokawa insisted that Japan can reduce its massive trade surpluses over the next several years.
For the record:
12:00 a.m. March 11, 1994 For the Record
Los Angeles Times Friday March 11, 1994 Home Edition Business Part D Page 2 Column 6 Financial Desk 2 inches; 42 words Type of Material: Correction
Japanese trade--Because of an editing error, a story in Saturday’s paper greatly exaggerated the size of Japan’s trade surplus with the United States. The $6.83-billion current-account surplus reported for January represented Japan’s trade imbalance with the world, not just the United States.
In a policy speech to Parliament on Friday, Hosokawa repeated a promise made by his predecessor to President Clinton last July, declaring that “we must . . . take effective measures to achieve a highly significant decrease in our current-accounts surplus over the medium term.”
The current account--which measures total trade plus such non-trade transactions as insurance, shipping and tourism--jumped to $6.83 billion in January, compared to $5.22 billion in the year-ago period, the Finance Ministry said.
The surplus started falling last year, leading some observers to believe a turnaround had begun. That optimistic scenario now seems to have collapsed. During his wide-ranging address to Parliament, Hosokawa made no specific reference to the Clinton Administration’s action on Thursday reinstituting the Super 301 provision of U.S. trade law, which allows Washington to retaliate against Japanese imports if Japan fails to open its market to U.S. goods. But many of his remarks were clearly aimed at addressing concerns of the United States, which ran a $59.3-billion trade deficit with Japan last year.
“Along with managing the economy so that domestic demand leads growth, we need to ensure that the Japanese market is open to the rest of the world in accordance with international trade rules,” Hosokawa said.
Hosokawa also pledged to carry out economic and administrative reform--strongly urged by the United States--by “demolishing systems and practices no longer compatible with the needs of the times.” He vowed to make “non-regulation the norm and regulation the exception . . . to expand business opportunities and consumer choice.”
He singled out “information telecommunications” as one area in which government regulation should be removed to promote business opportunities.
“Economic structures that used to work rationally are no longer effective,” he said.
The apparent willingness of Hosokawa’s government to carry out at least some domestic reforms favored by Washington has helped prevent concerns about a possible trade war from having too severe an impact on Tokyo stock and currency markets.
The yen generally has been strengthening as currency traders bet that Washington will favor a stronger yen, which makes Japanese exports more expensive in dollar terms and thus harder to sell. A strong yen in turn threatens prospects for economic recovery in Japan and thus has a depressing effect on stock prices.
But the dollar rebounded Friday, boosted by buying by the Bank of Japan, to close at 104.80 yen, up 0.88, or 0.8% over Thursday’s close. Encouraged by the weaker yen, stock investors sent the benchmark Nikkei average of 225 stocks up 360.14 points, or 1.8%, to close at 19,966.00.
Washington has also been pressing Tokyo for more expansionary fiscal policy to promote economic recovery and greater consumer spending, which could draw in more imports and help reduce the trade imbalance.
