U.S.-JAPAN TRADE ACCORD : Pact Gives Clinton Pluses on the Political Front

When President Clinton set out early in his term to sweep away global trade barriers, he had no trouble lining up the support of Nobel laureate economists, former Presidents and members of Congress from both poles of the political spectrum.

But the ordinary Americans he wanted so desperately to endorse his quest to be the “trade President” were unmoved or downright hostile--until Clinton confronted the Japanese over trade barriers.

Lopsided majorities supported his threatened sanctions against Japanese auto makers, polls show. And Americans are likely to react the same way about the deal announced Wednesday to open Japanese markets to U.S. autos, even if its real impact turns out to be somewhat less than its billing, analysts say.

The market-opening pact may be a special hit with Ross Perot-style economic nationalists and blue-collar Midwestern Democrats, whose support Clinton badly needs for reelection.

And, important for Clinton, the agreement allows him to avoid the considerable danger that the threatened 100% tariffs on Japanese luxury cars would swing public opinion against him by forcing layoffs at Japanese car dealerships and risking Japanese retaliation. Given California’s large market for Japanese cars, that could have proved especially troublesome for Clinton in a state whose 54 electoral votes could be essential to his political future.

The President’s tough approach with the Japanese may have had pluses and minuses as trade policy, one White House aide said recently. But “the politics,” he added with emphasis, “are excellent.”

Clinton has been preaching the benefits of free trade for a long time. As he pushed for approval of the North American Free Trade Agreement and the last tariff-cutting round of the former General Agreement on Tariffs and Trade, he declared on numerous occasions that lower barriers would allow strong U.S. industries to increase exports and generate high-skilled, high-paying jobs.

Yet White House aides acknowledge that such declarations can seem unpersuasive unless they are coupled with a corollary: that the United States will strike back at nations that cheat by maintaining their own barriers while enjoying free entry to others’ markets.

“It’s hard to convince people that change really is their friend,” one aide said. Clinton’s tough approach is a “secondary tactic” to make nervous Americans feel more confident that, in the new economic order, they will be protected when others do not play fair.

Some of the strongest support for Clinton’s strategy comes in states such as Ohio, Illinois and Michigan, which are at the heart of Clinton’s reelection strategy. Union workers believe that Japanese trade barriers “have meant tens of thousands of lost employment opportunities,” said Mark Anderson, director of trade affairs for the AFL-CIO.

Some political analysts say the bow to union workers comes at a good moment, since some of Clinton’s other recent policy initiatives, such as the need to cut future medical spending to balance the budget, tend to alienate the party faithful.

Conversely, Clinton’s confrontational approach on Japanese auto trade has not been a hit with the so-called elite opinion leaders who have supported most of his earlier trade initiatives.

Editorialists at leading newspapers have criticized the White House for demands on the Japanese that might not hold up at the World Trade Organization, the new arbiter of trade disputes. Last week, more than 100 economists, including three Nobel laureates, urged Clinton to back off an approach they considered dangerous and protectionist.

But average Americans, who view Japanese trade as a top national security threat, clearly see things differently.

“In the popular mind, this is going to be considered in a way that far outweighs its economic importance,” predicted Gary Hufbauer, an analyst at the Institute for International Economics in Washington.

Robert Hormats, a vice chairman of Goldman Sachs International in New York, said Clinton may have wrested the optimal benefit by “getting an opening in the Japanese market without having to pull the trigger” and impose sanctions.

“This really strengthens his claim as the most activist trade President we’ve had since World War II,” said Hormats, who is a former deputy U.S. trade representative.

Analysts noted that the sanctions could have destabilized currency and capital markets even if the Japanese did not quickly retaliate with higher tariffs of their own.

And Clinton’s public support could have faded rapidly with publicity about the harm the sanctions were doing to consumers and to Japanese car dealers in the United States. For instance, former President Jimmy Carter quickly lost his strong support for blocking U.S. wheat sales to the Soviet Union after its invasion of Afghanistan as the domestic impact of Carter’s move became clear.

The confrontation with the Japanese has provided Clinton Administration officials rare opportunities to score rhetorical points.

A few weeks ago, a reporter demanded that U.S. Trade Representative Mickey Kantor tell him what he would say to Americans who wanted to look at high-quality Japanese cars. Kantor replied with obvious relish: “Go look at a few great American cars!”