Japan refuses to yield

June 05, 1995|By Marcia Stepanek | Marcia Stepanek,Hearst News Service

WASHINGTON -- In the surly auto trade brawl between the United States and Japan, Tokyo is hanging tough and is unlikely to back down because it thinks it's right and it thinks it's going to win.

President Clinton and his trade team have been betting that Japanese carmakers will figure it's cheaper to buy enough U.S-made auto parts to make Detroit happy than to risk Washington's threatened $5.9 billion in tariffs on Japanese luxury cars, which are set to take effect June 28.

But in recent days, Washington has abandoned hopes of a quick settlement to the long-running dispute, which will be aired again Thursday and Friday in public hearings in Washington by U.S. trade officials.

Last week, the administration agreed to a Japanese request for more talks June 12 and 13 in Geneva, but both sides expressed doubt that they would resolve the issue.

Japanese officials also expect little or no progress when Mr. Clinton meets with Japanese Prime Minister Tomiichi Murayama June 15 in Halifax, Nova Scotia, at the annual summit of the world's seven richest democracies.

In taking its tough stance, Tokyo points out that it has already agreed to open more auto dealerships to U.S. carmakers and to dismantle some regulatory burdens, including costly inspections of imported automobile parts.

Trade Minister Ryutaro Hashimoto insisted last week that he has already made "the maximum possible concession" to Washington.

The Japanese government remains unwilling to accede to U.S. demands that it pressure manufacturers like Nissan and Honda to buy more U.S. parts for their new models. Tokyo derides the idea as "managed trade" -- akin to forcing it to tell Japanese companies what to do.

Japan also says the proposed U.S. sanctions -- 100 percent tariffs on 13 Japanese luxury car models -- are illegal because the rules of the new World Trade Organization bar a member nation from raising tariffs without WTO approval.

Japan has launched a massive public relations campaign around Asia and Europe warning that if the United States can slap sanctions on Japan, it could pressure other nations in defiance of the global rules.

In Asia, the "if-they-can-do-it-to-us-they'll-do-it-to-you" warning is paying off. And Europe, while agreeing with America that Japan's closed markets are a problem, has been pointedly cool to U.S. entreaties for support in its sanction threat.

"If you were to take an informal poll of countries around the world today, the United States would lose," says Rob Trice, manager of the Japan desk at the Center for Strategic and International Studies, a Washington think tank.

"European nations say sanctions are akin to bullying and are not in keeping with free trade principles. And Asian countries fear that if Washington gets away with bullying Japan, they'll be Washington's next targets -- whether on issues of intellectual property, child labor or any number of other things," he said.

Another factor bolstering Japan's tough position is its domestic politics.

Trade Minister Hashimoto -- like Mr. Clinton -- has much to gain by taking a hard line. Mr. Hashimoto, who wants to be Japan's next prime minister, is winning points with a Japanese public anxious to say no to the United States after years of concessions.

"Hashimoto is in tune with the present assertive mood in the country," Mike Mochizuki, a Japan expert at the Brookings Institution, another Washington think tank, says.

Parliamentary elections in Japan will be held this summer, and Prime Minister Murayama is expected to step down. Odds are high that Mr. Hashimoto will take his place.

Mr. Clinton is pushing ahead with sanctions because he thinks they could exert pressure on Japan's already wobbly economy long before the WTO can rule on their legality.

The WTO's dispute-resolution process is set up to promote more talks in hopes the two sides can settle the matter on their own. Some Japan experts say Washington may be underestimating Tokyo's willingness to endure sanctions until the WTO can rule.

"I don't think the Clinton administration fully understands the long-term political ramifications of its short-term approach now to Japan," Mr. Trice said.

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