Lost orders makes Japan think again about US link
Japanese businessmen are finding that close economic ties to the United States can have distinct drawbacks: * A Soviet order for a $200 million polyester plant was plucked from Japanese hands at the last moment by West Germany.Skip to next paragraph
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* The sale of a $100 million offshore oil drilling rig to the Soviet Union was also blocked.
* In September, the Soviets took away an order for a $350 million steel sheet plant that had been awarded to a consortium of Nippon Steel and America's Armco corporation and turned instead to France's Creusot-Lore.
For cancellations, postponements, and lost orders like these, business leaders here blame Japan's loyal adherence to Washington's policy of economic sanctions against the Soviet Union, imposed for its December 1979 invasion of Afghanistan.
As a result, of Tokyo government is under new pressure from its supporters in Japanese business to be less slavish in following the US.
(The Soviets have been Japan's most important customer for such plant orders, along with the two protagonists in the Gulf war, Iran and Iraq. Partial sanctions are also in force, at US request, against Iran.)
The Japanese are particularly bothered at losing out to Western Europe, which is showing much greater flexibility on sanctions.
All of this has added another source of irritation to the already complicated US-Japanese difficulties over trade, economic, and defense-related issues. And the advent of a Ronald Reagan administration in Washington gives little comfort to the Japanese that these problems will disappear.
Two Japanese groups bidding for the polyester plant order ultimately lost out to West German interests because the government's policy on sanctions denies Export-Import Bank credits to finance any new trade deals with the Soviets. This is the same reason the $100 million offshore drilling rig is stalled.
The loss of the steel plant contract to Creusot-Lore particularly rankled businessmen here, because the Japanese-US consortium had won the order last year over the same French company after three years of fierce competition that revolved around the granting of generous trade credits.
Incensed at this example of European perfidy in "breaking ranks," putting Japan at a distinct disadvantage in a crucial trading area, various industrial sectors here began lobbying the government for help.
Governments sources answer that in principle, sanctions will be maintained.
But Japan will closely watch developments in Washington and European capitals , and there could possibly be some easing of restrictions on smaller deals of a nonstrategic nature.
It doesn't help win sympathy for sanctions, however, when businessmen here see that the US in not only trying to prevent exports to the Soviet Union, but is also trying to keep Japanese goods out of the American market.
Some Japanese political and business sources are beginning to assert that a number of problems, including the bitter campaign in the US against a flood of Japanese cars on American roads, are inextricably linked with wider issues -- such as Japan's loyalty as an American ally.
Mr. Reagan's election has provided little reassurance.
His hard-line public policy toward Moscow is being assessed here as meaning continuation of sanctions and demands that Japan and Europe give even stronger backing to the US -- including spending much more on defense.
This brings in the longstanding American irritation at the "free ride" the Japanese have allegedly enjoyed on defense since the World War II, allowing them to divert money that would otherwise have gone to the military into the automated plants that now turn out millions of cars and color television sets for export to the US.
Diplomatic commentators picture the government of Prime Minister Zenko Suzuki as torn between a desire to settle the various issues of friction as quickly as possible and having to agree that Japanese industry is being unjustifiably blamed for America's self-inflicted economic ills.
This was demonstrated by a recent furor within the Cabinet over a proposed summit meeting in Washington between Mr. Suzuki and the incoming president. Some felt an early meeting was essential to halt the apparent rising tide of anti-Japanese feeling in the US, while others argued vehemently for delay -- one senior official saying there was "no need for every Japanese prime minister to go rushing off to Washington like a small school-boy to report immediately to the new headmaster."
Cars remain the area of most immediate concern. The International Trade Commission's rejection of union and Ford Motor Company demands for import curbs on Japanese cars -- cited as being the main cause of Detroit's decline -- was initially hailed here as a victory.
A more sober appraisal now has convinced government and industry that the ITC ruling did nothing to end the uncertainties, and may even have exacerbated them.
There is considerable concern here regarding protectionist moves under way in Congress against Japan, and no one is really sure whether the Reagan administration can be relied on to uphold the principles of free trade.
As one result, the International Trade and Industry Ministry has begun a study of how the auto industry here is to survive through the 1980s if its main overseas markets are severely restricted (the domestic market has no capacity to take up the slack).
It is against this background of strain that some Japanese businessmen feel they're the ones being hurt by trade sanctions against the Soviet Union. Many share the feeling, as one put it, "of being asked to cut our own throats to promote the illusory American macho image. We are being asked to make up for the failures of American foreign policy, and it's grossly unfair."