Japanese welcome sign of better relations with U.S.

May 25, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau of The Sun

TOKYO -- Smiling and clearly relieved, Foreign Minister Koji Kakizawa said late last night that the world's two biggest economic powers had gone through a tortured series of negotiations but finally been able to "give birth to an understanding."

The understanding to restart trade talks was no easy birth and largely symbolic, but after a bitter and acrimonious dispute it was greeted in Japan as a clear sign that U.S.-Japanese relations are heading along the right path and toward agreement on substantive points.

"There is no way we will [now] fail," said Hiroshi Kumagai, a government spokesman who used to run the Ministry of International Trade and Industry, which headed the trade talks.

Other Japanese leaders also suggested that the deal meant that crucial barriers to a more comprehensive trade agreement with the United States had been broken.

"I am absolutely confident we will find a way," Prime Minister Tsutomu Hata was quoted as saying.

Formal trade negotiations broke down in February when then-Prime Minister Morihiro Hosokawa flatly rejected U.S. demands, saying that the Japanese had come of age politically and could stand up to the United States. His defiance was hailed here as historic and courageous.

But as Japan's trade surpluses soared, its currency strengthened and its economy languished, Mr. Hosokawa's stand provoked widespread consternation that Japan's most important political and economic relationship was fraying badly.

The breakdown also reflected badly on the United States, which was viewed as trying to bully Asians into accepting U.S. standards on trade, justice and human rights. For example, the United States recently criticized Singapore for caning a youth convicted of vandalism and threatened trade sanctions against China for human rights abuses.

Two months of acrimony finally broke in mid-April with informal talks. When Japanese officials went to the United States last weekend, they expected at least one more round of preliminary negotiations before the pivotal framework talks could restart.

What they found instead, said a participant in the negotiations, was "that the atmosphere was far more conciliatory, and far less confrontational and hawkish" than before.

Two specific obstacles had led to the collapse of talks in February: Japan's unwillingness to stimulate its economy by cutting taxes as much as the United States wanted and Japan's refusal to use specific measurements to gauge improvement in trade issues.

Over the weekend, Japanese officials say, they found that the United States had backed down on both points.

In terms of an extended tax cut, the United States became convinced that Japan's chaotic political scene precluded any near-term commitment to a sustained fiscal policy -- tax cut or otherwise.

The officials also said that the United States backed off demands for numerical indicators to track Japan's willingness to absorb imports.

U.S. officials had strenuously denied ever emphasizing a strict numerical indicator, but Japanese officials said that the United States had privately pushed for indicators.

Observers had become increasingly convinced that a breakthrough in negotiations was near, said Tomoko Fujii, an economist at Salomon Brothers in Tokyo. Ms. Fujii said the economic consequences would be positive, with the resolution probably blunting the rise in the yen.

Yet it is not at all clear that the agreement, or any agreement, will reduce the core source of friction between the two countries: the huge disparities in willingness to purchase from abroad.

"To be realistic, this does not ensure reduction of trade deficit, but it should raise the chances for the U.S. to increase sales to Japan," said Ms. Fujii. "We still cannot control imports to the U.S."

Moreover, tough negotiations remain. "It won't take years, but it would be overly optimistic to assume weeks," a Japanese official said. "We should be cautious in not becoming overly optimistic."

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