Envoy sees and '80s slump in Japan

Japan, whose meteoric economic growth has been one of the success stories of the 1970s, is experiencing an economic slowdown that will hinder the island nation throughout the 1980s, according to Yoshio Okawara, Japan's ambassador to the United States.

The worldwide recession and increasing competition from third-world industrial nations are the major culprits behind Japan's declining fortunes, but the current rash of protectionism in the United States and Western Europe threatens to slow Japan's growth even further, Mr. Okawara said in an interview.

"Certainly, our people have no illusion," the ambassador said. Japan's national economy expanded last year by less that 3 percent, a lackluster performance compared with the 10 percent annual growth rates Japan experienced during the 1960s. "No country can enjoy such high growth rates of its economy anymore," Mr. Okawara said.

Japan's powerful economy today is second only to the US, and the ruling Liberal Democratic Party has been increasingly criticized for persisting with self-interested trade policies while its allies slog throug the worst recession in four decades. But the Japanese government may change its outlook as its economic fortunes decline.

"Japan cannot pursue a policy independent of other nations," said Mr. Okawara , whose nation posted a $16.8 billion trade surplus with the US last year. "Japan's prosperity very much depends on the prosperity of other parts of the world."

Exports of cheap, well-made Japanese automobiles, video recorders, and computer chips have penetrated the US and Western European markets deeply in recent years, provoking respect, envy, and even fear in Japan's competitors. Japan's unemployment rate - 2.4 percent last year and one of the world's lowest - has been an object of envy. In 1982, inflation rose a scant 2.7 percent. .

But at home, auto exports are shrinking, the deficit is increasing, and unemployment is rising. Japan's once-healthy steel industry is operating at the lowest levels in more than a decade, and Japanese manufacturers are suffering from competition from low-cost imports invading their market from Singapore, Korea, and Taiwan.

Abroad, Japan's export growth is being slowly circumscribed by the US and nations in Western Europe, which have persuaded Japan to accept "voluntary limits" on the volume of some goods shipped to those countries. Japanese auto manufacturers are facing stiffer competition as Detroit's auromakers inmprove their production techniques. And allies are putting increasing pressure on Japan , a nation of 116 million people about the size of Montana, to spend larger portions of its economic wealth on defense spending.

"We're deeply concerned about this protectionist movement," Mr. Okawara said during a recent visit to the Port of Hampton Roads, one of America's major shipping ports.

Japan is particularly concerned about domestic-content legislation before Congress that would require up to 90 percent American content in many high-volume auto imports, he said. The legislation, passed in the House last year, has been introduced again in the new congressional session with 120 House cosponsors. The United Automobile Workers of America says it will fight again for passage this year in both the House and the Senate.

Mr. Okawara said Japanese officials fear that the legislation might be expanded to include other products. "It could invite similar protectionist measures form other American partners in Europe against the US or any country, " he said.

These and other developments concern Japan because its auto industry - until now a symbol of its economic might - is under siege. After arm-twisting from the Reagan administration, Prime Minister Yasuhiro Nakasone's government in February agreed to limit Japanese auto exports to the US for a third year, to 1.68 million units.

Despite the limits, Japan's share of the US market increased last year, based on low overall auto sales. But that was little consolation to Japanese automakers, which in 1982 experienced a 7.6 percent fall in motor vehicle exports, one of the largest year-to-year declines since the 1950s, according to the Japan Automobile Manufacturers' Association.

"We appreciate the US's economic difficulties and the plight of the UAW members," Okawara said of Japan's decision to limit automobile exports. "Our government and industry felt that we better give breathing space to the automobile industry to retool themselves."

But he acknowledged that Japan's restraint was partly motivated by the concern that it might be shut out of the US, the largest consumer market in the world and a customer for more than 40 percent of its automobile exports.

The Reagan administration has unsuccessfully lobbied Japan to extend export limits a fourth year. The ambassador contended that such action would not be necessary because a strong US economic recovery in 1983 and '84 would significantly improve the US auto industry's situation. He declined to say whether his country would reconsider its position if a strong recovery were not to occur. In past statements, Japanese officials have said a fourth year is out of the question.