Behind the Swordplay
TWO C's are necessary to make the international economy grow efficiently: Competition and Cooperation.
As we suspected, the big trade drama concluded this week in Geneva was five parts "High Noon" showdown concealing five parts of "Let's Make a Deal."
This latest in a two-decade-old series of US-Japanese battles over lopsided trade balances, market share, and leadership in key global industries ended - not surprisingly - in a useful compromise.
Competition met cooperation and the two sides agreed to move into the future on a slightly altered basis. Japanese auto firms, having had success with carmaking plants in America, will not suffer from their promised new experiment of buying more parts and making still more cars here.
The slowly changing Japanese home market will benefit from allowing increased competition. Consumers there will gain in two ways: (1) Competition will drive prices down. (2) They will have more choice. Sales of American models will depend on each customer's weighting of reliability, novelty, prestige, and service.
Three other points deserve mention:
First, Japanese leaders are correct when they boast that "numerical quotas" were avoided in the Geneva compromise. Specific numbers of cars appear in the pledges of Japanese companies. But any firm's production and sales projections can change with ups and downs in global economies. So this long-running quarrel isn't over. And air routes and cameras await bargaining. We hope the same spirit of compromise will prevail, however much it is cloaked in public swordplay.
Second, the world's No. 1 and No. 2 economies did not undermine the new World Trade Organization. As exporters, they need the WTO if they want a reasonably orderly world in which to do business.
Third, President Clinton's elation over the trade deal warrants attention beyond the momentary upward blip it will give his poll ratings. Republican strategists who have counted him out should begin to watch his populist moves carefully. Some of his opponents now call him irrelevant. But he's gotten back into the game by wooing Perot deficit hawks and deserting his party's liberals, and then taking stands that please various parts of the liberal constituency. It should be remembered that Mr. Clinton's idol, President Kennedy, was down in the polls, weak in his influence with Congress, and looking vulnerable a year before he would have had to campaign had he not been assassinated.
But, in his final six months, he came out of the shadows, exuded confidence, launched popular moves like a test ban with the Russians, and regained lost momentum. Don't be surprised if the starry-eyed lad from Arkansas who once shook Kennedy's hand has a similar strategy in mind.