Tough US attitude on trade

Although the United States and Japan have patched up some of their trade differences, more confrontations will occur in the future, says Clayton Yeutter, the chief negotiator in trade matters for the US. Mr. Yeutter sees some improvement in Japan's trade practices but still considers them ``self-serving'' and says Japan has wanted ``all of the good things and ... none of the responsibilities'' in world trade.

The US trade representative told the Monitor last week that sanctions on Japanese electronics products, which were partly lifted last week, have protected the threatened American semiconductor industry.

Without the tougher US trade position, US chipmakers would have been devastated, he says, and there would have been serious economic and national-security implications.

``The sanctions have clearly gotten the attention of the [Japanese] government and hopefully also of the firms,'' Yeutter says. But overall, the tougher US trade policy ``does mean that we'll probably have more confrontations with the Japanese in the future.''

He adds, ``I don't see that tarnishing the relationship any. That may be a reflection of the maturing of the relationship. And hopefully the Japanese will be paying due attention to some of the messages we send, as in the semiconductor case. And hopefully that will affect the decisionmaking.''

A more confrontational White House position has been necessitated in part by growing congressional calls for trade protection. A major trade bill could reach the Senate floor for debate as early as this week. Yeutter's strongly worded points about the Japanese indicate the Reagan administration's continuing campaign to show that it is alert to unfair trade practices.

The most recent point of contention was with semiconductors. Before the 1986 semiconductor agreement with Japan and the recent sanctions, the semiconductor industry was in great danger, Yeutter says. It has now come back, in part because of trade measures and in part because economic conditions have improved for chipmakers.

``I really believe that this may be a case where we saved a major high-technology industry in this country from its demise,'' he notes. ``That industry had one foot in the grave and the other almost there at the time we negotiated that in the semiconductor agreement, and there have been very dramatic improvements in the financial well-being of the industry since then.''

Japanese companies were practicing ``predatory pricing'' against this industry, with the ``basic objective of putting the competition down the tubes - and were doing very well at it.'' Many semiconductors were being sold at 40 percent below cost. ``Not very many companies were going to survive in that case.''

Had the US semiconductor industry collapsed, Yeutter says, that would have had ``major implications to the technological future of this country, because that is really the heart of the whole high technology industry. Not only would there be major economic implications, but also major national-security implications.''

Yeutter says Japanese companies have largely stopped dumping microchips in the US and other countries. But whether American chipmakers are getting better access to the Japanese market is still to be determined. US chip sales in Japan have been relatively flat, Yeutter says. Yet with the cheaper dollar, these sales should have been picking up. He says it is unknown whether this is because of ``intangible trade barriers or simply excess supply.''

Besides semiconductors, Yeutter notes that problems remain with Japan in the trade of agricultural products, tobacco and cigarettes, and the access of US construction companies to the massive Kansai Airport project. The latter problem especially could cause new trade friction.

``The general feeling is that the Bechtels of the world can compete with anybody in airport construction,'' Yeutter says, referring to the big San Francisco-based contractor. ``But opening up that opportunity in Japan is very challenging.''

The Commerce Department believes it has ``a strong commitment from Prime Minister Nakasone to ensure that there will be full opportunity for American firms to bid. Some of us are not so sure that that commitment is likely to be fulfilled. And if not, then there becomes an open question as to where we go next.''

Yeutter is highly critical of Japan's attitude toward world trade. On a recent visit to Japan, he ``over and over again'' told Japanese leaders that ``they are now one of the major economic powers of the world and they have to start acting like it. As a nation they have to accept some responsibility, in fact a much greater responsibility, for how the world functions.

``They now must play a significant role in the economic system of the world. They can't sit on the sidelines and simply be the beneficiaries of all of the good things and accept none of the responsibilities in a purely mercantilist approach any more - where they export everything and import nothing, take advantage of every market opportunity but keep everyone out of the Japanese market. That kind of self-serving stance, and one that is pure self-interest in the short-term sense, has to change.''

The newly announced Japanese trade and economic stimulation policy is a step in the right direction, he says, ``but it must go beyond that.''

This more aggressive stance in Reagan administration trade policy dates from Yeutter's arrival as US trade representative in 1985. In September of that year, Reagan, a champion of free trade, set forth a more hard-edged policy towards unfair trading practices, aimed not just at Japan but other countries.

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