Ghosts of Protectionism

Should protectionism again rear its ugly head in the United States because of competition from increasingly cheaper imports, Japan could once more be an easy target for Washington. Tokyo was the scapegoat for Congress when it was an economic giant in the late 1980s and the U.S. felt threatened.

The last thing the touchy world economy needs is a repeat of that. President Clinton fully understands the ills of protectionism, and that’s a big reason why he is again in Tokyo, pressing the Japanese to carry out banking and deregulatory reforms, open up markets and create an environment in which consumers feel confident enough to spend.

As long as Japan is stuck in its prolonged economic slump, it cannot--or will not in some cases--buy exports from other Asian nations, which need the sales to recover from the region’s financial crisis. And Tokyo sent another discouraging signal this week at the meeting of the Asia-Pacific Economic Cooperation group in refusing to further cut tariffs on fish and lumber imports as part of APEC’s overall tariff reduction effort.

So more Asian goods, including some from Japan, are heading to U.S. shores instead. The United States quite simply cannot be the market of last and only resort, because U.S. industries and workers will lash out if they feel threatened by a tide of foreign goods. For example, cheaper steel from Japan and elsewhere already has raised the ire of the U.S. steel industry and workers who are accusing foreign makers of dumping the metal at below production cost. The U.S. trade deficit with Japan fell in September from record levels, but imports from Japan are expected to exceed U.S. exports to that country by about $60 billion this year. The overall U.S. trade deficit is expected to hit a 10-year high.

Tokyo needs to stimulate its economy rather than hunker down in fear and paralysis. Other nations would benefit if Japan stepped out confidently, going beyond its latest $196-billion stimulus plan. Clinton, trying to gather the consensus typically necessary to create change in Japan, took to his favorite format, holding a town hall-style meeting to reach out to ordinary Japanese consumers with his message. Perhaps they are fed up enough now to demand more of their politicians. Japan, as we have said before, cannot simply export its way out of its problems.