Tokyo Sees EC Turning Inward After French Vote

TO Japan, the sliver of support for European unity by French voters looks like a double-edged sword.

While Japanese officials hailed this boost for European Community integration, they also warned that the EC might still be preoccupied in redesigning the terms of its proposed unity and that other European nations will soon take up their own votes on the Maastricht Treaty.

"They've made it past the first hurdle aimed at the deepening of the European integration," says Gaishi Hiraiwa, chairman of the Japan Federation of Economic Organizations.

Yet Japan gave a sigh of relief after the vote because the outcome is likely to prevent damage to its own economy. With its large trade surplus, Japan was under international pressure before the vote to stabilize the wobbling European currency markets. Now, Japanese Finance Minister Tsutomu Hata says, the currency markets "might finally be able to overcome [their previous instability]."

In addition, the EC currency turmoil last week had strengthened the value of the Japanese yen and if the value stays high, it will hurt the nation's exporters. Almost one-third of the increase in Japanese exports since 1986 has been to the EC, bringing Europe's share to 21.9 percent.

By and large, though, Japan was on the sidelines leading up to the Sept. 20 vote. Last week, "the only reaction to European events was a short-lived stock market rally, on speculation that German [interest] rate cuts would trigger rate cuts in Japan - speculation that was quickly quashed by Japanese authorities," says Robert Feldman, a Salomon Brothers economist in Tokyo. "The most telling event was the lack of movement in the yen/dollar exchange rate."

While the referendum result was important to Japan, says Sozaburo Okamatsu, director general of international trade policy at the Ministry of International Trade and Industry, it does not have "a direct influence on the Japanese economy."

Rather, Mr. Okamatsu warns, even with the "yes" vote, the EC's international cooperation "is in trouble." If Europe turns inward to readjust moves toward integration, he says, there will be less attention to global issues, such as aid to Russia and the Uruguay Round of world trade talks.

The French vote, Okamatsu adds, also will help a new 15-nation grouping called the Asia-Pacific Economic Cooperation (APEC). He says EC unification will expand the EC economy and draw in more Asian exports, boosting APEC's confidence.