Japanese Are in for More US Tough Talk on Trade
A BIT of bravado seems to come with the job of United States trade representative.
During the early days of the Bush Administration, when then-representative Carla Hills was just establishing herself in the international arena, she vowed to pry open Japanese markets with a crowbar.
The new trade representative Mickey Kantor recently pledged to use a sledgehammer to force foreign market access for US goods and services.
While the Japanese can expect more tough talk from American negotiators who represent their biggest overseas market, trade watchers are skeptical that it will prompt Tokyo into action.
During his meeting here on Friday with visiting Japanese Prime Minister Kiichi Miyazawa, President Clinton focused on the persistent problem that "it is harder to sell in Japan's market than in ours," and issued a stern warning to redress the growing trade imbalance.
Mr. Kantor himself has a ready list of Japanese noncompliance with bilateral trade agreements over the past several years. And he has already lodged complaints against Japan for its failure to fulfill a 1992 commitment to step up procurement of American-made auto parts. In one of many US objections to Japan's agricultural protectionism, Kantor recently wrote to Japanese officials protesting barriers that keep American-grown apples from being sold in Japan. Opening high-tech market
The administration's major efforts, however, will be to force a range of US high-technology products into this Asian market. Some 65 percent of the US trade deficit with Japan is precisely in this area, Kantor says, referring to computers, electronics, autos, and automobile parts.
"Tokyo has traditionally done what it can to accommodate Washington," says Douglas Ostrom, senior economist at the Washington-based Japan Economic Institute, an organization funded by the Japanese Foreign Ministry.
Asked about Washington's leverage with Tokyo, he says "the US can threaten Japan with restrictions on Japanese exports, and make life tougher for Japanese financial institutions, by tightening restrictions on Japanese banks that operate here."
Trying to avert retaliatory actions by US trade policymakers, Japan is giving a high profile to measures that Washington should welcome. The most recent - Tokyo's $115 billion economic stimulus plan that, according to Mr. Miyazawa, will help increase purchasing power for US goods and services and shave the US-Japan trade deficit.
This comes on the heels of last month's announcement from Japan that it satisfied its goal to open up one fifth of its semi-conductor market to foreign producers.
Washington would like to see such special targets set in a host of other industries. Japanese officials have opposed duplicating this special arrangement in different sectors, and Mr. Ostrom says they will continue to balk at the "numerical targets," terming them "managed trade."
"This is not the first time the Japanese have said they will redress the trade deficit," says Alan Tonelson, research director at the Economic Strategy Institute. "Japanese prime ministers have been coming here since the 1980s, promising that they will stimulate spending in order to purchase US imports. But history has clearly shown that there is not much link between Japanese economic growth rates and the trade balance."
Mr. Tonelson says Japanese producers in the US are exacerbating the trade deficit and doing little for the nation's tax base. "It's hard to get Japanese transplant producers to buy US parts. They're still buying the more costly Japanese parts, which is actually to their advantage, because if you're not making a profit here, then you don't pay taxes here."
In Washington on Friday, Japanese officials rebuked the Clinton Administration's yardstick approach as managed trade. Nevertheless, Miyazawa and Clinton agreed that by July they will set up a way to address industry specific trade problems. Japan's slowdown
Many economists say that given the slowdown in the Japanese economy, Tokyo is unlikely to give any ground. Its export industries, particularly electronics and automobiles, have been hit hard by an economy bogged down by sluggish consumer spending, a massive build-up of inventories, depressed investment, and a steady stream of business failures, which reached a six-year high in March.
Meanwhile, the US trade numbers continue downward. On Friday the Commerce Department reported a half-percent increase in the nation's overall trade deficit during February, led by a 5.8 percent worsening of the US deficit with Japan.
For the first two months of 1993, the US deficit with Japan was $8 billion, 68 percent of the $11.8 billion American trade imbalance. The US imported $84.3 billion more in 1992 than it exported; the deficit with Japan accounted for $49 billion of that total, or 59 percent.
Clearly troubled by the nation's trade deficit, Commerce Secretary Ron Brown is intent on registering his concern with Washington's most recalcitrant partner. He will travel to Toyko Thursday, where he says US trade grievances will top his agenda.