US trade strain eases with Japan, but Europe poses growing problem

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THE amount of Japan-bashing in Washington is dying down. That's because it has become less justified. Over the years, Japan has lifted many of the government obstacles to imports. In this regard, it may not be much worse than the United States or the European Community.

Japanese business still colludes to keep out foreign goods and companies. Indeed, notes Harald Malmgren, a trade consultant in Washington, Japan's banks and insurance companies have become so financially powerful that the Ministry of Finance in Tokyo has less influence on their business practices than it did some years ago.

Despite Japanese business efforts to limit imports, they are growing. In July, imports from the United States surged 21.4 percent from the same month the year before. The European Community saw its exports to Japan grow 30.7 percent.

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Notwithstanding, Japan's trade surplus grew 3.5 percent in July from the same month a year ago. But it was the first such rise in 15 months.

Another obstacle to imports is the Japanese distribution system. Prime Minister Noboru Takeshita has just appointed an advisory panel to look into the question of reforming the system, as promised at the Toronto economic summit in June.

At present, notes Wall Street economist Sam Nakagama, ``mom-and-pop'' stores serve as a kind of social security system and a buffer against unemployment in Japan. Their political power is such that department store chains have found it easier to expand abroad than at home. Small local retailers are able to block or delay construction of large, efficient discount stores.

There is growing pressure from consumers as well as foreign producers for a substantial liberalization of the regulatory procedures involved in the opening of new stores. Mr. Nakagama sees enough progress to say that Japanese consumer habits are already on the way to being transformed. Department stores and boutiques run promotions on imported goods from Europe and the US. Cheaper imports are forcing price cuts in domestic products. As a result, Japan's trade surplus will continue to moderate over the next year or two.

``If so, trade disputes with Japan should become less emotional,'' Nakagama holds.

Mr. Malmgren suspects that new US trade legislation will open the way for a host of private industry petitions against Japanese and other imports.

Both Malmgren and Nakagama expect US trade problems with Europe to come to the fore now. One US complaint is the $15 billion in subsidies Europe has used to help its Airbus win jetliner orders in competition with Boeing and McDonnell Douglas. The US has also been seeking the elimination of subsidies in farm trade, subsidies that have enabled European Community farm goods to push into world markets in a major way in recent years.

M. Peter McPherson, deputy Treasury secretary, worried in a speech earlier this month about the potential damage to outsiders from the European Community's goal of greater unification by 1992.

Malmgren sees a more confident West Germany and France taking a more independent stand from the US in its relationships with the Soviet Union and its East European neighbors, partly because they see American policy as ``erratic.'' Germany is eager to make Gorbachev-type reforms ``irreversible.''

``The politics of going their own way is very strong. Where will it go?'' he asks.

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