Retreat to Reality with Japan

May 26, 1994

Having pushed their trade dispute to the point of mutual disadvantage, the United States and Japan are moved bravely ahead toward the status quo ante -- toward the policy positions of the Bush era that Candidate Clinton so willingly assailed and President Clinton so coyly embraces.

Make no mistake: Japan is the clear winner in this test of wills, which is not to say that its weak governments have enhanced the well-being of their people. Quite the reverse. If the Clinton administration is to execute this latest flip-flop without excessive embarrassment, it had better hope Japanese business prevails over Tokyo's bureaucracy.

Consider the retreats ordered this week by U.S. Special Trade Representative Mickey Kantor in order to restart trade negotiations. He:

* Stated specifically that the U.S. will not seek numerical targets in measuring commerce with Japan, a position Tokyo insisted upon from the start.

* Withdrew threats of retaliation if Japan fails to meet U.S. demands.

* Made it clear the U.S. will not impose arbitrary deadlines for ever-elusive agreements.

* Registered no further objections to Japan's refusal to come up with a tax cut package big enough to boost U.S. export sales.

We cite these shifts not to pound the president but to praise him. Most of his retreats from the excessive foreign policy postures he set forth while running for the Oval Office have been prudent if not politically correct. Refusal to commit ground troops to Bosnia, hesitation to send the Marines into Haiti, reluctance to use trade sanctions as a club against Chinese human rights violations -- all these reflect good judgment.

So if Mr. Clinton adjusts Japan trade policy, he will get no complaints from this corner. We have long been uncomfortable with the protectionists and managed-trade addicts in the left wing of the Democratic Party. It has been Mr. Kantor's unpleasant task to keep them at bay while trying to get the Japanese to take market-opening moves that are really in their own self-interest. He has a long way to go, but at least he has gotten negotiators back to the table after a bad 100-day hiatus.

The secret is to promote trends, not targets. If more Japanese auto dealers sell U.S. cars (to cite a Kantor example), or if imports of key products move steadily upward, this may have to be sufficient, provided Japanese policy aims at continued improvement. Trade agreements can help, but in the long run market forces will prove decisive.

Already there are instances of foreign imports selling much cheaper than their domestic counterparts. Already, more Japanese manufacturers are outsourcing abroad for parts and commodities that come at bargain prices. Once these trends are translated into improved Japanese living standards, the U.S. can rely on new world trade reforms to hasten the market-opening process. Meanwhile, the U.S. and Japan should work hard for mutual advantage rather than mutual disadvantage.

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