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US Works To Soften Big-Stick Approach With Japan


THE Clinton administration brought a new brand of grit and determination to trade negotiations with Japan. Convinced that more-open Japanese markets could improve the United States economy, US officials have vowed to get results.

But a year-long round of negotiations, under an arrangement called the US-Japan Economic Framework, has so far proved fruitless. Last weekend, the US said it would pursue punitive sanctions if agreements were not reached by the end of September. Tokyo has said sanctions would force it to end negotiations in certain areas.

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At present, US officials are trying to assuage Japanese concerns over US rhetoric, even as the administration seems unwilling to entirely let go of its get-tough approach. The adminstration's strategy draws support - particularly in the business community - but controversy continues over what steps would be most effective.

The heads of major US corporations recently met privately with Clinton policymakers and faulted them for being ``unnecessarily and ineffectively confrontational'' toward Japan, says a senior administration official. ``By imposing unrealistic expectations, we have let Japan take the high ground and look like free traders and make ourselves look like managed traders.''

The past year, the official adds, has been rife with ``indecision and obsession with minutiae, which has led us to miss the big picture.'' He suggests that the only way for the US to open Japan's markets is to broaden its approach by teaming up with the European Union, the US's single-largest trading partner, ``and jointly try to further our shared interests in the Japanese market.

``We should also use APEC (the 17-nation Asia Pacific Economic Cooperation forum) and every other multilateral means at our disposal to muster support.''

Previous US sanctions

The administration, however, seems to have been inspired by a very narrow trade-policy triumph: the 1986 agreement governing trade in semiconductors. That pact mentioned a number - 20 percent - to describe the share of the Japanese market that foreign manufacturers, primarily American, could or would attain.

The US said the figure was a commitment; the Japanese took it as a nonbinding goal. Washington charged Japan with failing to carry out the agreement and, in April 1987, imposed $300 million in punitive trade tariffs - the only major instance of the US actually using sanctions against Japan in postwar history.

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So when the Clinton administration began to press for ``objective criteria'' - its term for ways to measure the level of market opening and access - Tokyo froze. Its concern led to a breakdown in the talks at a US-Japan summit last February, even though President Clinton was already saying ``objective criteria'' did not mean what the Japanese insist it means: numerical targets.

Much of this dispute is semantic, but it is clear that the instance of trade history most impressive to US trade officials is the one most distressing to the Japanese.

A senior Japanese diplomat in Washington says it is precisely the threat of trade sanctions that pushes Tokyo further away from making measurable concessions. ``Once we commit to a certain number, it is very easy to resort to those sanctions if those numbers are not met. If you cannot exclude that possibility, then I do not see the wisdom of committing.''

US trade negotiators worry that trade agreements without numbers amount to bland promises to do better next time.

``Our experience has been that when [agreements] don't have teeth in them, we end up worse off at the end of the day than when we began,'' a US official in Tokyo says.

The administration does have its supporters. James Vines, spokesman for the American Automobile Manufacturers Association, says that while some of Clinton's advisers ``don't want to play hardball with the Japanese ... sooner or later it will work.''

Now is a propitious time to push Tokyo to make concessions, asserts Ronald Shaw, president and CEO of Pilot Pen Corporation of America, the US subsidiary of a top Japanese pen manufacturer. Japan's bureaucrats must contend with a prolonged economic recession and a country full of exporters hard hit by exchange-rate hikes that price Japanese goods out of the market. ``As US-Japan trade relations continue to go sour,'' he adds, ``the yen will only appreciate and the cost of Japan's exports will soar.''

Mr. Shaw is confident of Clinton's approach. ``We have to get tougher and continue to do it through negotiations, on a sector-by-sector basis.''

A senior US trade official asserts that there has already been progress, including a recent government deregulation package. Japanese politicians, bureaucrats, and business people, he says ``recognize that theirs is a vastly over-regulated economy.'' The US official in Tokyo attributes the lack of an agreement over the past year to constant political turmoil in Tokyo. ``Every time we seem to be gearing up to get something done, things change,'' he says.

As talks proceed in advance of the Sept. 30 deadline,one executive at the Tokyo branch of a major US corporation concludes, ``The real question hinges on whether the administration is going to cave or not, whether the administration is willing to accept an agreement that doesn't have clear commitments for results.''

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