Japanese Try to Head Off More Aggressive US Policy On Looming Trade Issues

US-JAPAN TIES

JAPAN has embarked on a calculated courtship of top Clinton officials to sway the young United States administration away from a possible tough stance on trade disputes.

The courtship opens with visits to Washington by both the foreign minister and finance minister of Japan later this week. They likely will be followed by the trade minister, who plans to pave the way for a summit between Japan's prime minister and President Clinton, perhaps by April.

Japan's urgency to influence new Clinton appointees, just a month after they assumed power, is due to their disparate views on trade strategy and the number of looming disputes with Tokyo.

During the early days of the Clinton administration, "it appears that there will be some tough demands on Japan," says Gaishi Hiraiwa, chairman of Japan's Federation of Economic Organizations. Japan, he adds, "has to take the initiative and promote free and fair competition."

With a high dependence on the US market for its exports, Japan worries that Clinton might eventually adopt a "results oriented" trade policy to further open the Japanese market. At present, Japan finds little coherence on trade policy among the various Clinton officials.

Prime Minister Kiichi Miyazawa was quoted in a recent interview as saying: "They [Clinton officials] will probably say all sorts of things. Whenever there is a new administration they always blow a lot of hot air, but after several months it quiets down."

Some Clinton officials have talked of demanding that Japan promise specific market share for products made by US exporting companies as a way to create more US jobs.

In contrast, the Bush and Reagan administrations generally favored a free-trade policy, focusing mainly on Japan's business practices and government rules. The one exception was a 1986 agreement that set a 20 percent market share for sales of foreign semiconductors in Japan.

Japanese officials do note a recurring theme among statements by Clinton officials to seek strict reciprocity in US-Japan trade.

"We ... have an obligation to America's firms and workers to ensure they are able to benefit from the growth of Japan's economy, just as the strength and openness of the US economy has helped fuel Japan's prosperity over many decades," Warren Christopher said in Senate hearings last month to confirm him as secretary of state.

In a survey of 93 Japanese companies operating in the US, the Japan Overseas Enterprises Association found nearly half the respondents believe Clinton will take an aggressive approach toward Japan, possibly reviving the "Super 301" provision of the 1988 US Trade Act that allows for retaliatory measures against countries deemed to be unfair trading partners.

HAT provision expired in 1990, but not before President Bush used it to open Japan's market in satellites, supercomputers, and lumber products.

Congress plans to take up a new Super 301 bill, a step that has evoked unusual saber-rattling from Japan. "If they take action based on Super 301, that will invite retaliation," says Sozaburo Okamatsu, director-general for international trade policy at the Ministry of International Trade and Industry (MITI).

Other Japanese officials prefer a conciliatory approach with the new Democratic White House. "It is important that US-Japan trade friction should be settled calmly and smoothly," MITI Minister Yoshiro Mori says.

Japan is embarrassed that its 1992 trade surplus hit a record high of $107 billion with the world, while its surplus with the US was up by 14 percent to $44 billion over the previous year. But Japanese officials say the blame for this large trade imbalance lies in the lack of competitive US goods and Japan's need to boost its domestic economy as way to raise imports.

Clinton Democrats "should change their own perception that the Japanese market is closed," says MITI Vice Minister Noboru Hatakeyama. "Until they change this perception, we cannot find the right cure."

Last month, the US Chamber of Commerce in Japan released a study that noted a doubling of US exports to Japan in the past decade, but that many markets remain "unpenetrated." "We still have a long way to go" to open the Japanese market, says Chamber president Richard Johannessen Jr. With a trade imbalance of $44 billion, "we think there's a lot of room for results."

Two specific trade disputes are seen as tests of Clinton's still-vague trade policy. One is whether to threaten sanctions against Japan in March when figures are released on the market share for foreign computer semiconductors. The number is not likely to reach the 20 percent goal set under a bilateral pact. "At that point we are going to know" what the Clinton trade policy will be, Mr. Johannessen says.

The other dispute is a proposed increase in the tariff on Japanese minivans from the present 2.5 percent to 25 percent, a step being pursued in Congress.

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