Let's Nail Down Numbers On Tokyo Trade
It is all so familiar. For 20 years, Washington and Tokyo have argued over America's trade deficit with Japan. On Feb. 11, they plan to do it again when President Clinton and Prime Minister Morihiro Hosokawa meet.
When the cold war was at its height, Washington was willing to accept the economic loss that came with the deficit--in exchange for Japan's political and military support against the Soviet Union. Without the cold war, such economic sacrifice is no longer politically acceptable in the U.S.
Neither are the reasons that Japan gives for the deficit. Tokyo has used a twofold strategy--of finger-pointing and pleading for patience--to stave off reducing the deficit. First, Tokyo told the U.S. it had no one to blame but itself. Huge federal budget deficits had to be financed by Japanese capital that, in turn, had to be generated by a big trade surplus with the U.S.
At the same time, Japan told the U.S. that the quality of its goods, especially cars, was miserable. Why would the Japanese, much less Americans, want to buy them? But now, the budget deficit is under control, and Detroit's quality is world-class: Consumer Reports, for the first time in 12 years, rated an American car, the Dodge Intrepid, as high as any Japanese make--in fact, a tad higher. So the U.S. has cleaned up its act. Japan, however, has not. In 1987, the trade deficit was $56 billion. In 1994, it will hit $55 billion.
Last July, President Clinton and then-Prime Minister Kiichi Miyazawa agreed on a new framework to reduce the deficit. The new goal: mutually acceptable, measurable results.
After decades of fruitless negotiation, setting numerical targets may be the only mechanism left to pry open Japanese markets to American products. It worked for semiconductors, and it can work for other goods. American corporations must try much harder to penetrate the Japanese market. But with competitive U.S. products selling everywhere else in the world, such targets should be the economic line in the sand for President Clinton at the summit.