Share this story
Close X
Switch to Desktop Site

Japan's huge trade surplus splits Cabinet

A feuding Japanese government has failed to find an answer to its most pressing diplomatic problem - the huge trade surplus with the United States and Europe.

A special Cabinet meeting Nov. 17 had been heralded as the occasion for unveiling a comprehensive package of measures that would trim several billion dollars off the surplus - otherwise expected to exceed $15 billion with the US and $10 billion with Europe this year.

About these ads

But on Nov. 16, government officials were spreading the word that the various ministries were badly split on the issue and little agreement could be expected. And this was exactly how the meeting turned out.

It was made clear, in fact, that nothing substantial can be expected before the planned Cabinet reshuffle around the end of this month.

And inevitably there will be further delay as new ministers settle into their new responsibilities and begin the process of interministerial negotiations all over again.

In fact, the US may have to wait until at least next January for any action on its complaints.

Toshio Komoto, director general of the Economic Planning Agency, presented his Cabinet colleagues with a four-point ''external economic package'' aimed at achieving a more balanced trading pattern. But virtually every point was rejected by one or another of the ministries, he admitted to reporters later.

His plan would have included tariff cuts, removal of import curbs (mainly on farm products), emergency imports of strategic metals for a national stockpile, and establishment of a foreign currency loan system to finance emergency imports of (mainly US-built) aircraft, which would probably be leased out to third countries.

The latter proposal died because Finance Minister Michio Watanabe said it was unwise to lend foreign currency while the yen's value against the dollar is relatively low.

About these ads

The other measures failed because ministers warned of strong opposition they would provoke from various industries or the powerful farm lobby.

But the biggest problem was that the package inevitably would have involved the government in heavy spending just when it is trying to trim its budget to eliminate chronic deficits.

All the Cabinet achieved was agreement to ease some of Japan's complicated import inspection procedures that are viewed abroad as a major nontariff barrier to expansion of their sales here.

Mr. Komoto said the ministers also agreed to urge exporters to avoid ''shipping specific items to specific markets,'' which was vague enough to be virtually meaningless.

In the longer term, Mr. Komoto reported, the Cabinet agreed to promote industrial cooperation in investment and technology transfers, send out more trade missions, and sponsor fairs to encourage imports of more manufactured goods.

But there was little to suggest a quick action to reduce the current embarrassing trade surplus as required by both the US and the European Common Market.

Meanwhile, in a television interview Monday, Prime Minister Zenko Suzuki said he planned to reshuffle his Cabinet to bring in men who would be able to resolve the trade disputes with the West.

(In fact, some observers wondered whether Suzuki had ''set up'' his Cabinet for Tuesday's failure to justify removal of certain ministers with whom he is not happy. Others blamed his ''lack of leadership'' for the Cabinet squabbling.)

The prime minister expressed opposition to export curbs as a means of cutting the huge trade surplus. ''A simple stopgap measure (like that) would only result in trade equilibrium on a reduced scale. What is needed is for (Japan) to find ways to expand its imports,'' he said.

He also rejected American pressure to increase defense spending as a means of offsetting the trade surplus by saying that there was a fundamental lack of understanding in the US of Japan's position.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.