Revival of US Trade Law Actually Calms Japanese

WHATEVER reaction President Clinton intended to provoke in Japan last week, his reactivation of a tough US trade law known as ``Super 301'' was met by a quiet sigh of relief in Tokyo.

Many Japanese political and business leaders saw the move, which allows the US government to retaliate against any country judged to be engaged in unfair trade practices, as Washington's soft option. Mr. Clinton could have been much harder on the Japanese by shortening the time available for trade negotiations.

``Super 301 is more geared toward extracting concessions from the targeted trade partners than imposing trade sanctions,'' commented NHK, the national broadcasting network.

That view was reflected in the Tokyo stock market, which rose after the reactivation of Super 301 was announced. Investors felt that the mandatory two-year negotiating period before sanctions can be imposed would be more than enough time for current trade disputes to be settled.

While government leaders express their concern at the reactivation, they are also being more than a little conciliatory. ``There are some points on which we may be able to do a little more, like the Motorola problem, insurance, and government procurement,'' says Prime Minister Morihiro Hosokawa.

In fact, the first of those problems, involving the US electronics company Motorola Inc., may already be close to settlement. The Motorola dispute was one of the principal reasons for the reactivation of Super 301 and is due to be reviewed by Washington as grounds for retaliatory measures.

But soon after Super 301 was reactivated, the Japanese press reported that Motorola's partners in Japan, the Nippon Idou Tsushin Corporation (IDO), had agreed to increase access for the US company. If Motorola and IDO reach an agreement, a primary reason for the reactivation of Super 301 will disappear.

But other problems remain. Autos and auto parts, for example, still account for more than half the US trade deficit with Japan. The last time Super 301 was enacted in 1989, the US targeted supercomputers, satellites, and timber as the main areas of complaint. US sanctions were never imposed, however, since Japan quickly agreed to import more supercomputers.

Signs of similar concessions in the auto market were evident last week when the Transport Ministry announced that it would no longer individually inspect each of Chrysler Corporation's four-wheel drive Cherokees. At the same time, the ministry also announced that senior officials will travel to the US to facilitate such approval for other US cars. That will be a big boost for US automakers, who complain that individual inspections are costly and time-consuming.

Japanese government leaders have been quick to stress that new moves to open Japan's markets have nothing to do with the reactivation of Super 301. ``Japan is determined to make its utmost efforts to strive for smooth operation of our external relations, irrespective of the aforementioned moves in the US,'' says Chief Cabinet Secretary Masayoshi Takemura.

Mr. Takemura characterized Clinton's reactivation of Super 301 as a unilateral action running counter to the rules of the World Trade Organization, which was created by the General Agreement on Tariffs and Trade at the end of last year.

Industry leaders also called for further market opening, while trying to distance such measures from Washington's action. ``We need to promote market opening and correct our trade imbalance, regardless of Super 301,'' says Gaishi Hiraiwa, chairman of the employers' organization Keidanren, a federation of Japanese business and industry leaders. What Japan needs to do, most businessmen say, is remove what they see as the shackles of government regulation. That was the main economic platform of Mr. Hosokawa when he took office last July. Reformists say that deregulating the economy would not only help Japanese industry and boost consumption, but also remove obstacles to US imports.

It is regulation of the cellular phone market, they say, which has forced Motorola to work with a partner it did not seek, and has kept cellular phone use in Japan at only 2 percent of the total number of phone users (in contrast to the average 5 percent for other industrialized countries). The construction sector is also heavily regulated, making it impossible for US contractors to bid for major construction projects.

Hosokawa has made efforts toward deregulation, but finds himself at odds with Japan's powerful ministries. He has promised to announce measures to further deregulate the economy and open markets by the end of March.

After achieving record high approval ratings last year, polls suggest that the premier is now viewed by most Japanese as weak and lacking in leadership. Analysts say that he therefore has to tread a fine line - to solve the current trade dispute, but without being seen to ``give in'' to United States demands.

That is a balancing act that has toppled more than a few of his predecessors.

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