Japan's booming exports strain special US tie
Japan's ballooning trade surplus with the United States and Western Europe has become an urgent political problem requiring immediate Japanese action. That is the assessment of high-ranking Foreign Ministry officials, who are particularly worried about the obvious mounting irritation in the US Congress over Japan's trade performance. Congressional displeasure is likely to become more vocal when candidates step up their drive for votes as the 1982 midterm elections approach.
Chief Cabinet Secretary Kiichi Miyazawa announced last Friday that an extremely worried Prime Minister Zenko Suzuki would convene a special cabinet meeting in early November. The meeting would work out a fresh package of emergency measures to cut the swelling surplus.
The government has been badly embarrassed by the nation's strong export performance. Combined with a slump in imports, this made the Japanese trade surplus higher than every official economic forcast had predicted.
At this time last year, government economists were confidently predicting a $ 6 billion deficit in fiscal 1981. By early October they were admitting that, instead, there would be a surplus of some $7 billion. Now, the talk is of at least a $13 billion surplus, if nothing is done to halt the trend.
In Tokyo last week, visiting US Commerce Secretary Malcolm Baldrige made it plain Washington would not accept such a development.
One immediate problem is differing calculations on the size of the Japanese surplus with the US.
In the first nine months of this year, according to Washington figures, it was over $13 billion. The Japanese estimate is $9.2 billion (still twice the amount recorded for the same period last year).
Mr. Baldrige warned Japanese officials that the final figure for calendar 1981 could easily be $15 to $16 billion.
At the same time, the European Economic Community (EEC) is making threatening noises over an anticipated deficit with Japan of at least $10 billion.
Returning from leading a top-level business mission to Europe, Yoshihiro Inayama, chairman of Japan's influential Federation of Economic Organizations (Keidanren) warned that a major political problem was brewing if the government failed to intervene immediately.
For the moment, the Japan is leaning toward stopgap measures to reduce the overall surplus. But in the past these have always failed.
Government officials are now working out details of a $4 billion emergency import package to be announced in November. Purchases from overseas would include rare metals such as nickel, cobalt, and chromium to bolster government stockpiles. Uranium imports would be increased, and Japan would buy more overseas aircraft and lease them to third countries.
The Ministry of International Trade and Industry (MITI) is also considering a plan to lend foreign currency direct to trading firms to promote emergency imports, informed sources say. But the Finance Ministry is reported opposed to the idea.
Chief Cabinet Secretary Miyazawa admitted to reporters that nothing being proposed was a particularly good idea, but he declared, ''drastic action is necessary.''
However, US Commerce Secretary Baldrige has declared that emergency imports are not the ''right way to address the problem . . . we need to work out a long-range policy.''
And that, he made clear, should be centered on finding ways to increase American exports to Japan on a regular not one-time basis.
''Japan's markets are, in too many cases, closed,'' he complained.
He cited the specific example of Japan's ''overly rigid testing requirements and different standards'' in high technology areas that keep non-Japanese products off the market long enough to allow Japanese makers a chance to catch up.
Japanese refuse to accept claims that their market is closed to imports. The, fault, they say is lack of effort by foreign traders. Japanese officials insist a key reason behind the present Japanese surplus is high US interest rates. They say these have made the dollar more expensive in foreign exchange markets and made the yen cheaper. In Japan this drives up consumer prices for imports by making it more costly to buy dollars to finance these imports. Conversely, Japanese exports increase because the lower cost of the yen reduces the price of Japanese products for consumers in the US.
Japanese officials also insist that Japan must be careful about discouraging its export industries with such steps as the current voluntary restraints on auto exports. The reason is the need to earn foreign exchange to pay a massive raw materials import bill, including $50 billion for oil.
But official sources say Prime Minister Suzuki is well aware of the extreme danger of leaving the trade issue to fester - hence his call to the cabinet for urgent action.
According to these sources, there has been a further warning to Tokyo not to delay. It comes in the form of last week's draft resolution to Congress submitted by Rep. Stephen Neal (D) of North Carolina. The draft would urge President Reagan to ask Japan to pay two percent of its gross national product to the US as a ''security tax.'' This would compensate for Tokyo's low defense spending and for the cost the US bears to help defend Japan.
Sen. Jesse Helms, (R) of North Carolina is also leading a campaign for renegotiation of the US-Japan security treaty to place a bigger burden on Japan's wealthy shoulders.
No one in the Japanese government wants to see the two volatile political issues of trade surpluses and defense spending stirred up in the same cauldron.