How Much Can Bush Bring Home?

The Japanese cherish their weeklong New Year's break more than any other holiday. It's a time for family visits, dressing up in kimonos, eating such traditional delicacies as herring roe and rice-cake soup, and making the rounds of temples and shrines. But many officials are grimly foregoing their holiday as they anxiously prepare for one of the most difficult U.S.-Japan summits in years.

When George Bush touches down in Osaka on Jan. 7 with 21 CEOs of major U.S. corporations, including Detroit's Big Three, he has one purpose in mind--reelection. After hastily canceling an Asian trip last November, Bush has recast his first official visit to Tokyo as more of a trade mission, to suit the prevailing political winds at home. No longer do you hear him uttering psalms to free trade and the global partnership between the U.S. and Japan. "We are going to try to do our best to be sure that the trade is fair and continuing to get fairer," says the new Bush.

`REPULSION.' And that means wringing as many economic concessions as he can from Prime Minister Kiichi Miyazawa's government and Japan's private sector. But the strategy could backfire if the Japanese, angered that Bush is trying to score political points at their expense, dig in. "As for the U.S. relationship with Japan, the trip will clearly be a minus," editorialized the business daily Nihon Keizai. "We suspect that a majority of the Japanese view it with repulsion." Now, the fear is growing in both countries that Bush has created unachievable expectations that doom the summit to failure. That could cost Bush dearly in the political sweepstakes back home.

Bush has put the auto issue on the front burner. With good reason. Nearly three-fourths of 1991's ballooning $43 billion trade deficit with Japan stems from autos and auto parts (chart). While Japan exported 2.2 million vehicles to the U.S. last year, it bought a paltry 32,000 American autos, including those made in Japanese-owned plants. This comes at a time when General Motors Corp. alone has decided to lay off some 74,000 workers. "General Motors is like the Stars and Stripes to the U.S.," acknowledges Miyazawa in the Japanese press. "I can imagine how shocking it might be when that company is beaten by Japanese cars."

NO GUARANTEES. But Bush needs more than empathy. With U.S. auto executives leaning over his shoulder at high-level meetings, he'll find it hard to get away with rhetoric alone. "He can't just take all those major industrialists over there and come back with nothing," says John G. Onto, director of Georgetown University's Center for International Business & Trade. He also runs the risk that Japan critic Lee Iacocca might sound off--and further offend Tokyo.

What could make the trip a stalemate for Bush is that Tokyo is less inclined than ever to knuckle under to U.S. grandstanding. "The mood in Japan is not one where the leaders are saying: `We're going to do a lot to help America,"' says Gerald L. Curtis, director of Columbia University's Center for East Asian Studies. "They feel the problem resides in the U.S."

So it's unlikely the Japanese will do any more than make token gestures on autos. "If we're asked to guarantee an increase of imported cars from the U.S., we can't," says Noboru Hatakeyama, vice-minister for international affairs at the Ministry of International Trade & Industry. "This is not a command economy." He also slams the door on U.S. demands for an easing of emission standards. But the Japanese government has indicated it will relax certain other standards, such as requiring that brakes be tested in Japan on each car.

It will be only slightly easier to increase sales of U.S. auto parts in Japan. During the past couple of months, at MITI's behest, Japan's carmakers have announced plans to almost double their purchases of U.S. parts, to $16.3 billion, by the fiscal year ending in March, 1995. But this will include parts made by Japanese suppliers in the U.S.

Japanese auto industry sources also say MITI is pressuring them to lower their 10-year-old "voluntary restraint" ceiling on exports to the U.S. But that could be of little value since exports are nowhere near the ceiling of 2.3 million. For the fiscal year ending in March, the Japanese expect to ship 1.7 million cars to the U.S. Besides, Japanese Deputy Foreign Minister Koji Watanabe insists that the Bush Administration has made no such requests.

WATERED DOWN. Despite Miyazawa's efforts to win concessions from Japan's carmakers, there's reason to doubt he'll have the clout to follow through on his pledges. He is off to a disappointing start as Prime Minister. Miyazawa, for example, failed to win Diet approval allowing Japan's Self-Defense Forces to take part in U.N.-sanctioned peacekeeping operations, and he was unable to push through a new tax to pay for Japanese international contributions.

Even if Miyazawa had a better track record, the U.S. has ruefully learned over the years that promises from Japanese leaders are one thing and delivery another. To compensate for the likely modest breakthrough in cars, Japan appears ready to make other concessions, including a pledge to help fund America's proposed $8.2 billion Superconducting Super Collider, which many Japanese experts disdain. Another gift to Bush could be better market access for imported paper, glass, and computers.For Bush, the trick will be to make small concessions look like a watershed in U.S.-Japanese relations. Summiteers have a way of putting a positive spin on the grimmest of meetings. A U.S. President visiting Japan's beloved ancient capital of Kyoto, and perhaps even playing tennis with the Emperor in Tokyo, will surely score a few points with the Japanese public. And a planned Tokyo Declaration will loftily proclaim a new era of cooperation between two countries that need fresh reasons for their alliance.

But it's a second document, tentatively dubbed the Action Program, that will draw the closest attention. It will most likely include pledges by Bush and Miyazawa to work together on such global issues as the environment, arms control, AIDS, illegal drugs, and refugee relief. Japan will probably also agree to chair the economic session of the third round of Middle East peace talks in Moscow in late January. And the document will reassert the importance of continuing the mutual security treaty.

VICTORIES. In the end, what's most important to Bush is the appearance of having accomplished something. "This is not a trip for the Asians," says Ronald A. Morse, president of the consulting firm Annapolis International. "It's a visit for the media back home."

Bush will get mixed reviews in his visits to three other countries in the region. In Sydney, his first stop, Bush is likely to face criticism over exporting subsidized U.S. wheat. Then in Singapore, he'll discuss offers to open new military bases, now that the U.S. will be closing its facilities at Subic Bay in the Philippines. In Seoul, he will press for further liberalization of the Korean market, particularly in telecommunications, agriculture, and finance.

Overall, Bush will be seeking to shore up relations in a stable region that he has taken for granted. While he has devoted attention to such hot spots as the former Soviet Union and the Middle East, Asian powerhouses have been booming, with annual growth rates as high as 8%. "Only 5 or 10 years ago it was said that if the U.S. sneezed, Asia would catch pneumonia," says Burton Levin, former U.S. consul general in Hong Kong and now director of the Asia Society's Hong Kong Center. "Now the U.S. has pneumonia and these countries are hardly sneezing."

But the key test is Japan, the final stop. With the emphasis on opening up markets, the President will pay visits to a Toys `R' Us store in Nara as well as the Eastman Kodak Research Center in Yokohama for a demonstration of high-definition television. And there are plans for Detroit's Big Three and Tokyo's Top Five--Toyota, Nissan, Honda, Mitsubishi, and Mazda--to hold an hour-long meeting that Tokyo sources say will be long on symbolism and short on substance.

But even if Bush returns clutching a passel of purchasing orders from Tokyo, the victory would be only fleeting. Unless the U.S. economy picks up, no amount of trade concessions by Japanese leaders will make up for the rising jobless rate at home. And upon his return, the Democrats are certain to point that out.