Preserving a Valuable Relationship : Tokyo and Washington cut a deal and avert the destructive insanity of a trade war
The threatened trade war between the United States and Japan--which neither really wanted and from which both would have suffered--has been averted, at least for now, thanks to major concessions made just hours before punitive American tariffs on Japanese luxury car imports were to take effect.
The successful conclusion of 20 months of negotiations after more than 20 years of argument over broader U.S. access to Japan’s highly protected auto and auto parts markets is of course welcome, if not truly surprising. However acrimonious and prolonged their trade disputes have been, the United States and Japan both well understand the enduring importance of the strategic relationship they have forged in the post-World War II era. Whatever claims to the contrary have been made in recent weeks, it would have been all but impossible to insulate that relationship from the inflammatory nationalistic rhetoric that the threatened tariffs and the inevitable Japanese response to them would have triggered. Americans and Japanese alike can be grateful that wise heads on both sides understood the larger stakes involved in this dispute.
President Clinton deserves all the credit for this achievement that he has claimed, a credit he shares with his chief trade representative, Mickey Kantor. While the Administration’s approach has been questionable from the outset, its determination after decades of inaction finally to press the issue with Tokyo and to persevere was absolutely on the mark. The tariffs, about which Japan has already complained to the World Trade Organization, almost certainly would have been held to be illegal under agreements signed by Washington. That finding would not only have put the United States back on the starting line in the auto talks--and given Japan an implicit moral advantage--but also added new fuel to the isolationist and protectionist fires smoldering in Congress. That is something this country clearly doesn’t need.
Under the new agreement, Japan’s five biggest auto makers will voluntarily increase their purchases of U.S.-made car parts, including transmissions and engines. They will also expand their manufacturing capacity in North America. Toyota, for example, will raise its American output by more than one-third by 1998. Other auto makers have announced expansion and procurement plans worth billions. And Tokyo will lower its barriers to American car dealerships in Japan. In return, Washington has dropped its call for numerical targets for new U.S. sales to Japan. It would appear to be a good agreement, of clear benefit to both nations, not least because it leaves uneroded the basic security interests and ties that bind together the world’s two biggest economies.
