Why Can't U.S. Exports Boom In Japan, Too?

Despite all the naysayers, the American export drive is demonstrating great vitality. For the first time, the U.S. is in trade surplus with all of Western Europe, not just the 12-nation European Community.

One lesson seems to be that dramatically reducing the value of the dollar does help redress trade imbalances with trading partners such as Western Europe. All it takes is a level playing field--and time. A goal now should be to encourage U.S. companies to entrench themselves in European markets in preparation for the inevitable day when the dollar strengthens. Exporting, and international strategies, demand long-term thinking, not a quick-buck mentality.

What's puzzling is why the Americans have not been able to achieve a similar turnaround in their trade relations with Japan. True, the dollar has not declined nearly as sharply against the yen. But in sharp contrast to the performance in Europe, the U.S. trade deficit with Japan remains in near-stasis. A partial explanation is that even though U.S. exports to Japan are up, the Japanese are running just as hard to ship their Made-in-Japan goods to the U.S. Here, as is often the case, the Japanese try harder.

But a broader truth seems to be that a level playing field has yet to be found in Japan, despite U.S. efforts. It's no longer so much a question of tariffs and formal trade barriers, where the Japanese have grudgingly given ground. What's hurting most now is the way the Japanese have organzied themselves into inward-looking groups, or keiretsu. Another impediment to a flat field in Japan is distribution channels. In Europe, they are relatively easy to establish; in Japan, far more difficult.

These more subtle barriers are the nub of the bilateral Tokyo-Washington Structural Impediments Initiative (SII). So far, progress has been conspicuously absent. The fact, however, that the Americans have been able to crack Western Europe thanks to a relatively even playing field means that it is time to redouble the pressure on Japan through SII talks and other trade and industrial fronts. So-called cultural values are no reason to deny U.S. companies the same chance in Japan that they have in Europe.

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