How Tokyo views US-Japan trade dispute; Japan vs. the West: resisting the irresistible?

A recent Tokyo newspaper headline read: ''Does it boil down to Japan vs. everyone else?'' That sort of thinking led Japan badly astray in the 1930s. It is beginning to surface again in connection with trade disputes with the United States and Western Europe.

The US and Japan are now in the midst of the most serious trade friction in over a decade. According to C. Fred Bergsten, director of the Washington-based Institute for International Economics: ''This . . . current episode may be the nastiest yet - with the United States joined as demandeur by the European Community, with racist overtones already creeping into the rhetoric and frustration on both sides of the Pacific.''

A certain amount of tension is perhaps inevitable, given Japan's emergence as a major industrial power to challenge the preeminence of the US. Japanese economic success has won grudging admiration, but also growing hostility as a disruptive force in American economic life, with repeated charges of ''unfair'' competition.

Japanese university professor Jun Eto says: ''Japan is the only non-Western nation currently able to exert a significant influence on the world economy. This leads to growing irritation in the West at the Japanese way of doing things. In essence, Western commentators find themselves unable to understand Japanese economic success and are irritated that it demands their understanding.''

This tends to exacerbate a Japanese ''victim complex,'' a modern mentality that, for example, concentrates on the suffering of Hiroshima and Nagasaki atom bomb victims but conveniently ignores Japanese-initiated events that led to the bombing.

In a recent newspaper column, political commentator Hideo Matsuoka painted a picture of poor, honest, hard-working Japanese pitted against an outside world that sees only yen-hungry ''Japs.'' ''The Japanese are about as much understood by Americans and Europeans as the Mongolians were by Europe in the 13th century, '' he wrote.

This sort of emotionalism does not help the efforts of the governments in Tokyo and Washington to achieve an equitable solution to the real problems existing with trade.

For its part, Japan thinks it has done more than enough. There have been repeated packages of government economic measures designed to ''open'' the Japanese market to foreign products, the latest produced just before Prime Minister Yasuhiro Nakasone went to Washington in January.

Import tariffs and non-tariff barriers have been lowered on a wide range of agricultural and manufactured products, although in many areas the remaining barriers still discourage foreign firms from entering the Japanese market.

Where Japanese exports to the US and Europe were considered to be excessive and disruptive to the local market, voluntary restraint is being practiced. For example, Japan has extended its voluntary quotas on auto exports to the US for a third year.

According to Japanese officials, 36 percent in value of the nation's total exports are currently covered by voluntary restraint, including cars, steel, machine tools, textiles, television sets, and videotape recorders.

''All well and good,'' say the Americans and Europeans, ''but we're afraid it's not enough. You'll have to do a lot more if you want to avoid creating irresistible protectionist pressures that will lead to trade restrictions.''

This sort of talk irritates many Japanese.

Akio Morita, chairman of Sony Corporation, says: ''We can argue we have done nothing wrong because we have competed fairly with other countries within the free trade system. Japan has excelled making products demanded by consumers, serving the public of many countries. If we were to stop exporting to avoid trade friction, we could not live.''

Kiyohiko Nanao, director of the Foreign Ministry's second North American division, also laments the lack of Western appreciation of Japanese efforts to open its markets.

''There are many people in Japan who do not wish to make any concessions. If we never get praised, then it becomes increasingly more difficult to gain domestic understanding of the need to make concessions,'' Mr. Nanao says.

The real issue, some analysts insist, is the weakness of the yen against the dollar, which is closely linked to the restrictions imposed on the local capital market.

With no cash left in the barrel due to perennial budgetary deficits, the Japanese government relies on extremely low interest rates to encourage an economic revival. Such rates are possible only if restrictions are placed on the flow of capital in search of the best returns (such as are found in the US with its much higher interest rates).

James C. Abegglen, vice-president in the Tokyo office of the Boston Consulting Group, Inc., sees the trade issue as a red herring: ''If yen and Japanese lenders were part of the world money market, the current level of Japanese interest rates could not be maintained and the current very substantial under--valuation of the yen could not be continued.''

If he is right, then the Japanese may actually be grateful that all American eyes are concentrated on the ''side issue'' of trade.

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