U.S.-Japanese talks on trade end sourly

February 12, 1994|By Carl M. Cannon | Carl M. Cannon,Washington Bureau of The Sun

WASHINGTON -- In a diplomatic scene more reminiscent of Cold War summits between two antagonistic superpowers, President Clinton and Japanese Prime Minister Morihiro Hosokawa stood side-by-side yesterday, glumly telling the world that they couldn't resolve their differences.

The two nations know they need each other, the two delegations worked until 4 a.m. to try to iron things out and the two leaders professed respect and admiration for each other. But in the end, the United States and Japan failed.

"Unfortunately, we have not been able to reach agreement in any of the four areas we identified last July," a subdued Mr. Clinton said at a joint news conference. "Japan's offers made in these negotiations simply did not meet the standards agreed to in Tokyo."

Mr. Hosokawa, also clearly disappointed, provided a glimpse of how intense the negotiations had been when asked to say when some kind of meeting of the minds might be reached.

"I don't know," he said with a shrug. "I would like to reach an agreement as soon as possible, but I think there is a need for a little bit of cooling off."

This was a break from the tradition of U.S.-Japan trade talks. To save face at home, political leaders from each country found it desirable to sign agreements that later proved to contain elusive or ambiguous goals.

"Today, we could have disguised our differences with cosmetic agreements," Mr. Clinton said. "But the issues are so important for our own nations and for the rest of the world that it is better to have reached no agreement than to have reached an empty agreement."

The heart of the trouble is Japan's perennial and stubborn trade surplus with the United States -- an imbalance that even Tokyo concedes is caused, in large part, by a multitude of trade barriers that keep out U.S.-produced goods.

In the first 11 months of 1993, that trade imbalance was $54 billion, a figure that represents to American politicians millions of lost U.S. jobs.

In the July meeting, the two sides seemed to settle on an approach. The two would agree on criteria to measure Japan's tangible progress in dismantling trade barriers in four areas that account for most of the trade imbalance: autos and auto parts, insurance, intellectual property rights and government procurement in medical technology and telecommunications equipment.

To the Americans, the best test is simply how much of such items Japan buys from the United States, especially when compared with how identical products sell elsewhere where the United States and Japan compete.

But this approach has acquired a name, "numerical targets," which is even more unpopular in Japan than the closed-market )) system it seeks to undo. To the Japanese, numerical targets are dangerously close to a quota system in which Washington would dictate what Tokyo must buy. Such targets are anathema to free trade, they argue, and likely would become permanent.

"We do not want managed trade," Mr. Hosokawa said yesterday. "We don't want numerical targets to gain a life of its own . . . because at the end of the day, we believe it will lead to managed trade."

Mr. Hosokawa has insisted that the better way is for Washington to support his efforts at structural changes in how the Japanese practice capitalism and international trade. The thrust of these reforms is twofold: reducing the authority of Japanese bureaucrats who specialize in erecting hidden tariffs and other barriers to U.S. imports, and challenging the Japanese practice of having a few cartels buy everything from one another in a series of complicated gentlemen's agreements.

Mr. Hosokawa's reforms have already resulted in the opening of the Japanese market to rice imports, Japanese trade officials argue. And because the reforms pit the Japanese consumers against the entrenched bureaucracy, they have the support of the Japanese public, something the American approach doesn't.

Mr. Clinton acknowledged these reforms and praised Mr. Hosokawa for pushing them, but he said that talk and good intentions are no longer enough. In answer to a question from a Japanese journalist about why he wants Mr. Hosokawa to agree to an approach that is "not really popular among the Japanese people," Mr. Clinton summed up 10 years of American frustration with Japanese promises. "America's trade deficit with Japan is not very popular among the American people," he replied.

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