Japanese urge steps on US trade
Tokyo — To halt the progressive souring of trade relations between the United States and Japan, politicians and businessmen here are urgently considering the following steps: An all-out effort to increase domestic demand.
A $10 billion issue of ``Nakasone bonds'' in the world market.
An international conference to stabilize yen-dollar and other exchange rates.
An accelerated program to cut tariffs and simplify import procedures.
The tug of war between President Reagan and the US Congress over market-opening pressures vs. out-and-out protectionism has increased the sense of urgency here.
A series of high-level officials will be taking Japan's case to the US, starting with Foreign Minister Shintaro Abe at the end of this month, then veteran legislator Susumu Nikaido at the beginning of October, and culminating with Prime Minister Yasuhiro Nakasone Oct. 21. Messrs. Abe and Nakasone are primarily visiting the United Nations, but Mr. Nikaido, vice-president of the ruling Liberal Democratic Party, will concentrate on Washington.
Japanese leaders generally agree with President Reagan that opening markets in order to expand world trade is far better than protectionist legislation of the kind Congress wants. But Japan's own market-opening measures have been reluctant and slow, and the ``action program'' announced with great fanfare at the end of July failed to arouse much enthusiasm either on Capitol Hill or around the world.
Even if Japan opened its market totally, its trade surplus with the US -- $37 billion last year and probably $50 billion this year -- is not expected to shrink by much.
To attract imports in a really big way, domestic demand must be stimulated by tax reductions or government pump-priming, or a combination of both. Prime Minister Nakasone recognizes the need, but faces the same problem of huge government deficits that President Reagan does. Unlike the US President, Nakasone has chosen to rigidly restrict government spending -- defense and economic aid being the only exceptions.
Nakasone is appealing to private industry to increase investments at home instead of sending surplus funds abroad. Some of his rivals within the Liberal Democratic Party say this will not be sufficient -- there will have to be major pump priming as well. Mr. Nikaido is one such leader, and so is former state minister Toshio Komoto.
In talks with Nikaido on Wednesday, Mr. Komoto advocated a 6 trillion yen ($25 billion) tax reduction and floating state construction bonds to finance public works. ``Japan has the key to whether the world economic system collapses or not,'' Komoto was quoted as telling Nikaido. ``What Japan does could affect the fate of the world.''
The ``Nakasone bond'' proposal originated with the prime minister three years ago. But the Finance Ministry was unenthusiastic and remains so. The proposal was recently revived by Setsuya Tabuchi, president of Nomura Securities, according to a newspaper report.
Mr. Tabuchi's idea is to float 10-year government bonds on the international market -- $10 billion total in four batches. This would attract foreign money to Japan and keep the yen from falling precipitately as it has in recent years against the dollar.
The cheap yen benefits Japanese exporters and fuels American resentment, even though the real culprit is widely acknowledged to be high dollar interest rates caused by the United States' huge federal deficit.
The problem for Japan is that in order to attract foreign investors, monetary authorities would have to offer interest rates in the 10 percent range, whereas they can raise money at home at 6.4 percent.
The idea for an international monetary conference comes from Capitol Hill, where legislators are suggesting a gathering of top-ranking world leaders aimed at stabilizing world exchange rates. The meeting would be held in Washington in November and would prepare a report for the next spring's economic summit in Tokyo.
Finally, the import simplification program is essentially the ``action program,'' announced by Nakasone in July. Whereas that program envisaged many measures to be taken next spring, the new schedule calls for parliament to pass import-simplifying legislation this fall. Tariff cuts on more than 1,800 items would be carried out in January 1986 rather than in April as first announced.
Many companies are announcing their own import-promotion plans. Kobe Steel recently said it would import $2 million worth, mainly of consumer goods for sale to its employees. Toyota says it will buy large helicopters and auto parts from overseas, and that its total imports this year will reach 195 billion yen ($812.5 million).