The United States and Japan, allies across the Pacific, seem to be on a collision course over trade. Both sides recognize the seriousness of the situation. Neither seems to know how to avoid a showdown that will hurt both and benefit no one.
Even the Japanese ruling party's proposal for a five trillion yen ($34.48 billion) supplemental budget has failed to generate more than polite approbation from Washington, though the proposal is the very kind of pump-priming measure long demanded by the US. Finance Minister Kiichi Miyazawa took the proposal to the Group of Five finance ministers meeting in Washington Wednesday. The five nations taking part in the talks were the US, Germany, Japan, France, and Britain.
``Maybe a few thunderbolts will have to be hurled before both sides see how damaging such actions are,'' said a senior Japanese official recently.
Washington has announced it will impose stiff sanctions against Japan April 17, featuring 100 percent tariffs on certain Japanese electronic exports to the US. American anger over what is claimed to be Japanese violations of an agreement on semiconductor chip exports has reached boiling point, and there seems nothing Japan can do in the short time remaining to avoid these sanctions. Hints of retaliation from the Japanese side have only worsened the atmosphere.
The chip dispute is only one manifestation of an atmosphere of mutual anger and frustration, where the US insists Japan must open up its market more and Japan says the trade deficit is largely Washington's fault.
Prime Minister Yasuhiro Nakasone will visit the US this month for what may be the most crucial summit of his term in office. US sanctions against Japan will be in effect before the visit begins.
Despite pleas by a procession of Japanese officials, the sanctions are not likely to be lifted until Washington is satisfied that Japan is complying with last year's semiconductor chips agreement.
Somehow, in this highly charged atmosphere, Mr. Nakasone will have to shift the focus to the most basic aspects of the US-Japan ties. He will have to emphasize security links - the US provides Japan with a military-nuclear shield, Japan provides the US with bases almost on the Soviet Union's doorstep.
At the same time, Nakasone must be seen to be giving concrete answers to US complaints over trade. That is where the supplementary budget proposal is expected to play an important role.
Stimulating domestic consumption has long been an American demand. The Japanese response has been less than enthusiastic. Nakasone came into office pledging to reduce Japan's huge government deficit, and the powerful Ministry of Finance regularly reminds him of this promise.
It is Nakasone's party that has proposed a supplemental budget, not the government itself. When it comes to specifics, the Finance Ministry could well try to whittle the package down.
But by the time Nakasone leaves for the US April 29, the prospects for the supplementary budget should be much clearer. The regular budget will have been passed and the government will be able to focus its energies on sheperding the supplemental budget through parliament. This new budget represents a complete reversal of Nakasone's insistence up to now on reducing deficit financing. Pushing it entails a considerable political risk for Nakasone.