Japan: Why Clinton's Trade Warriors Are Making Nice

Last summer, hard-line U.S. attempts to pry open Japan's auto market nearly catapulted the two countries into a bruising trade war. But when Vice-President Al Gore begins a visit to Japan on Nov. 19, he'll be under strict orders from President Clinton, trapped in Washington by the budget impasse, to make nice. Gore will touch briefly on economic issues by urging Prime Minister Tomiichi Murayama to follow through on current trade pacts from autos to glass. Then the talk will turn to security. The highlight: an informal agreement to keep at least 47,000 U.S. troops in Japan.

Wait a minute. This sounds like George Bush, who always put security ahead of economics in dealing with Japan. Lured by the growing power of Asian markets and comforted by the collapse of the Soviet empire, Clinton had vowed to shift the focus to the trade chasm dividing the two economic powers. But now he's transforming himself from trade warrior to cautious diplomat.

POLITICAL RISKS. Why the abrupt change? Although Clinton's high-profile attempts to open Japan to American goods have played well with the U.S. public last summer, the White House now believes keeping the spotlight on trade poses downside risks--turmoil in the financial markets and a breach in U.S.-Japan relations.

U.S. Trade Representative Mickey Kantor had been slammed for squandering so much political capital on a weak auto pact last summer, so the Administration is wary about again raising expectations. The White House worries that a trade war during the 1996 campaign could be messy. And while Republican hopeful Patrick J. Buchanan may score political points by stirring up economic nationalism, the likely nominee, Senate Majority Leader Bob Dole of Kansas, is a longtime free-trader in no position to knock Clinton.

So the President has decided to declare victory. Kantor & Co. point to an 80% rise in exports to Japan during Clinton's term. The White House's new mantra: Let's make sure Tokyo honors the agreements they have already made. "No one can say the President hasn't achieved success," boasts a top aide.

The Clintonites also recognize that the two powers have mutual interests in preserving economic harmony. The President lowered his rhetoric after trade war threats sent the yen soaring, undermining Japan's already fragile banking system. Treasury officials, fearing Japan would dump its huge holdings of U.S. government securities, have since worked with Japan to boost the dollar.

The two countries also have strong strategic bonds. Even in the post-cold war era, they agree that U.S. troops are needed in Japan as a bulwark against North Korea's nuclear buildup, China's growing military muscle, and regional threats that could restrict sea lanes. The ties seemed to fray as the Japanese expressed eutrage over the tough U.S. trade line and American spying on their auto negotiators. And when three U.S. servicemen confessed in the abduction and rape of a 12-year-old Okinawan girl in September, deep resentments bubbled to the surface.

But just weeks after U.S. diplomats feared the Japanese might balk at even the innocuous troop deal, things seem to be back on track. The two superpowers will set up a committee to review the future of U.S. military base leases in Okinawa. The U.S. will support Japan's claim to a seat on the U.N. Security Council. And Clinton's emissaries will praise Murayama for deploying peacekeepers around the world.

Can the President get away with his new all-is-well Japan strategy? The trade deficit remains high, and new disputes may erupt. A 1991 deal increasing U.S. semiconductor chip sales in Japan expires in July, and tempers could flare over extending it. But for now, Clinton believes he's better off proclaiming he's won the trade war--and changing the subject.

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