An Impasse Likely to Endure? : Once again, U.S-Japan relations go tense

Batten down the hatches. It looks as if trade ties between Japan and the United States could degenerate into a drawn-out war of attrition. And that would scarcely prove salutary for the long-term relationship between two great nations.

The nub of the problem is of course the yawning trade imbalance that persists year after year. Tokyo annually runs a global trade surplus of about $132 billion--a very nice piece of yen indeed. Of that, almost half is red ink for America. And the Clinton Administration, like several U.S. administrations before it, firmly believes that a central cause of that $65.7-billion trade imbalance is Japan’s closed markets.

Despite all the efforts of U.S. Trade Representative Mickey Kantor, this grinding problem is now no closer to resolution and may in some respects be worse than ever. In part that’s because there are simply too many trade dollars in Japan and not enough trade yen in the United States. The yen has risen 22% against the dollar since the start of the year--an absolutely startling and ferocious run-up that many Japan watchers say will eventually boomerang on the Japanese by causing their economy to stall.

Not that the Japanese economy in recent years has been all that it has been cracked up to be. When not digging out from under earthquakes and other calamities, the economy has been suffocating under rampant deflation. The value of domestic assets, especially real estate, has been falling. Industrial investment--ordinarily the lifeblood of a thriving, ambitious, technologically advanced society--has dipped for four consecutive years, and a rise developing this year is expected to be modest at best.

America is trying to get at its problem with Tokyo the old-fashioned way--in direct and blunt bilateral relations. But that approach just doesn’t seem to work all that well. The bilateral telecommunications deal, reached with such fanfare, is in trouble, and the two parties, after years of struggling, still have not reached agreement on Japan’s highly protected auto trade. Once again Washington is threatening its Asian ally with trade sanctions. Sound familiar?

No end to the trouble is in sight. However divided and divisive the federal government in Washington seems these days, it is a model of purposeful efficiency compared to the inchoate Japanese government, a coalition of socialists and conservatives that remains uneasy even after nine months in power. So this government, headed by Prime Minister Tomiichi Murayama, probably couldn’t deliver on a deal with Washington even if one could be negotiated. It is not a pretty picture. Little seems to be working. A big chill may be settling over U.S.-Japan relations that is surely not good for either country.