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US, Japan Agree on 'Action Plan'

Citing 'compassion,' Japanese promise to buy more US imports

PRESIDENT Bush capped his tour of Asia by winning a catchall "action plan" of trade and economic proposals from Japan but failed to win over Japanese leaders on his reasons for such concessions.

The Japanese "see a need to take steps," said Mr. Bush's national security adviser, Brent Scowcroft, but "whether they are fully convinced of our reasons to take action, I'm not sure."

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A stark difference in the stated motives for the concessions, which were hammered out in talks described as harsh, led Bush to note how specific the plan is and how it will be monitored for compliance. Chief among the proposals by Japanese auto firms: to double their imports of auto parts from the United States and to boost yearly sales of US cars in Japan by 20,000.

"The US government and our business leaders have sent a strong message [to Japan] about the importance of fair access to markets," Bush said yesterday, a day after recovering from a short illness at an official dinner.

Compared to previous US-Japan trade agreements, "There's some specificity to go with the hope in this case," said Bush. He warned that Japan must restructure its economy or risk contributing to a collapse of the world trading system.

But Japanese leaders, dismissing Bush's claim that their markets are inaccessible, criticized US competitiveness, and spoke of their "compassion" toward an ailing US and concern over potential US protectionism as reasons for making concessions.

"With rapid changes in the world, the United States must be able to exercise its leadership," said Japanese Prime Minister Kiichi Miyazawa, "and with the US in economic difficulty, we have to assist."

"We thought we should make concessions in order to better the relationship and to remedy the trade imbalance," Mr. Miyazawa added. If nothing is done with the annual trade imbalance, estimated to be $41 billion in Japan's favor, "then protectionism will rise," he said. Three-quarters of the US deficit with Japan is due to autos and auto parts.

Miyazawa added that many of the problems in the US, such as AIDS, the homeless, and declines in educational quality and industrial competitiveness, were contributing factors to the trade imbalance.

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Privately, Japanese officials say they also wanted to help Bush in the presidential campaign against candidates who might "bash" Japan's trade practices and move to close US markets.

Bush said the "action plan," which covers trade issues from glass to lawyers, would help create jobs in the US - his main goal for the 12-day trip to Australia, Singapore, South Korea, and Japan.

But no official on either side could estimate how many jobs would be created, nor how much the trade imbalance would be improved, or whether the plan would ease the erosion of US industries, caused in part by the "targeting" of key markets by the Japanese government and companies.

"Do you think that a political settlement will really solve the trade problem between the US and Japan?" asks Isao Makino, legal adviser to the Japan Automobile Dealers Association and former president of Toyota America.

US officials at the summit, as well as many of the 18 business leaders who accompanied Bush, chafed at the idea of Japan's making a special effort to buy more US goods as a favor.

"Compassion should not be the basis of opening markets," said one US official, speculating that Japanese firms actually decided "it is in their best interest to ... become more actively involved in importing to make certain that their relationship with the world is truly a two-way street."

But Toyota Motor Corporation's announcement that it would sell as many as 5,000 General Motors cars a year through its dealerships came only after Toyota president Shoichiro Toyoda was called into the prime minister's office shortly before Bush's arrival.

This arm-twisting by Japanese government, which the US has criticized in the past, was an essential factor in the summit agreements. Not only were companies asked to set goals, but consumers will need to be convinced to buy American cars. Only about 15,000 cars made by US companies were sold in Japan last year, compared to 1.75 million Japanese cars exported to the US.

"If we're asked to come up with concrete figures [for increasing imports], isn't that the same thing as managed trade?" said Vice Minister of International Trade and Industry Noboru Hatakeyama. The US violated its commitment to free-trade principles at the summit, he says.

But the chairmen of the three US auto companies, who came with Bush in an usual joint mission, supported moves by the both governments to help US industry.

Beyond the "action plan," the summit also produced a political statement on global issues, called the Tokyo Declaration, and a commitment by both countries to boost their domestic economies for the sake of global growth. Bush also invited Japan's emperor to the US.

Another move by Bush during his Asian tour was to go along with a South Korean plan to cancel this year's joint US-Korean military exercise as a gesture for North Korea's promise to allow international inspections of its nuclear facilities.

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