`Chip wars' and negotiation
THE symbolism of an event can become more important than the event itself. Examples abound: then-candidate Ronald Reagan's insisting on ``fairness'' in the battle over who controlled the microphone in the 1980 New Hampshire primary debate; the Carter White House embargoing US farm exports to the Soviet Union after Moscow's Afghanistan invasion. The decision by the Reagan White House to impose up to $300 million in tariffs against Japan because of Tokyo's alleged failure to live up to a joint accord on semiconductors falls in the category of such symbolism. By itself, the US decision will not lead to a turnaround in the overall $170 billion US trade deficit. It will not reform Japanese trade practices. It will not provide a major boost for the US semiconducter industry. For that to have happened, the decision should have been made years ago - although the tariffs will give the US industry a ``breather.''
But as a symbol, the US decision is a tough signal to Japan that many Americans believe that nation is not playing by the economic rules. Except for a much smaller tariff action against Tokyo in 1985, this is the first major economic penalty imposed on a post-war Japanese government. Ironically, the decision will probably help to undercut Prime Minister Yasuhiro Nakasone, who has proven himself a firm friend of the US.
The decision was designed to punish Tokyo for failing to comply with an accord reached last summer. Japan was supposed to refrain from selling computer chips below cost in third world nations. Japan was also supposed to let US semiconducter firms gain a larger foothold in its domestic market.
The US tariff decision was regrettable. Yet, the administration, to its credit, took action only after it was in effect forced to the mat on the issue by Congress, as much as by any foot-dragging from Tokyo. Congress is expected to pass a comprehensive trade bill this year. And for many lawmakers, Japan has become a convenient excuse for the inability of American firms to take the innovative and managerial steps needed to make US products more competitive.
Further, the US action, despite the dollar figures involved, is relatively temperate. Only products that can be duplicated elsewhere will be targeted.
Tokyo's top trade negotiator is now in Washington. Mr. Nakasone comes calling next month. That's grounds for concluding that the two nations will find a way to avoid an all-out trade conflict.
Japan has billions of dollars invested in the US. It has hitched its economy to the US. And the US considers Japan its strategic partner in Asia.
The challenge is really long-range. The dollar continues to plunge against the yen and other currencies. That is helping to trigger the first real downturn in Japan in decades. Japan is a traditional society. Economic instability in Japan is not in the US or global interest.
Japan must find a way to reconcile its historically closed or restricted economic system with greater openness to Western, including US, goods and services. US industry, meanwhile, must more honestly adjust to the changing global setting.
