Japan Rebuffed in First Round

U.S. finds trade plan wanting and impasse is dangerous

While leaving the door ajar for further negotiations, top officials of the Carter Administration last week politely but firmly turned down a set of proposals from Tokyo for reducing Japan's huge international trade surplus. By keeping out foreign goods and saturating world markets with their products, Japan has piled up a surplus that this year is heading toward a record $15 billion, and this is hindering growth and increasing unemployment in the U.S. and Western Europe.

The proposals, carried to Washington by Nobuhiko Ushiba, Japan's new Minister of External Economic Affairs, were put together in response to intense U.S. pressure on Japan to reduce its trade barriers and stimulate its economy in order to boost demand for imports. But the concessions were far less significant than American officials wanted. To Robert Strauss, the President's chief trade negotiator, the proposals "fall considerably short of what this Government feels is necessary." Not surprisingly, Ushiba himself, in a burst of frankness, had warned reporters before leaving Japan that his proposals would not satisfy the Americans.

Among other things, the Japanese promised to abolish some nontariff barriers, eliminate certain export promotion measures, stockpile crude oil, liberalize foreign aid and speed up the growth rate of the Japanese economy from its present annual rate of 5.3% to 7% next year. A key provision calls for tariff reductions averaging 23% on 318 items, mostly industrial goods. For example, the 6.4% Japanese tariff on imported autos would be entirely eliminated. Tariffs on computers would be dropped from 13.5% to 10.5% and on color film from 16% to 11% --two important items. But quotas on the amount of beef that Japanese hotels can import would only be doubled, to 2,000 Ibs. in the current fiscal year--a laughably small amount, given the hunger of both Japanese and visiting foreigners for steaks and roasts. In all, the Japanese proposals did not satisfy the American demand for an early, one-third reduction in Japan's trade surplus with the U.S., which is expected to reach $8.5 billion this calendar year.

The package that Ushiba, a former ambassador to Washington, carried to the U.S. was heavily watered down from proposals that Premier Takeo Fukuda initially circulated privately. Those brought screams of anguish from Japanese farmers and industrialists, who are used to foreign competition only in overseas markets, not at home. Indeed, there is speculation in Japan that Fukuda deliberately presented to Washington what he knew would be an unacceptable package so that he could tell balky supporters, in effect: "See, I told you the Americans would not buy it."

Nonetheless, just as both sides in a labor negotiation can overplay their hands and wind up with a strike that nobody wanted, the Japanese-U.S. trade impasse is dangerous. Any effort by Fukuda to reduce Japanese import barriers further will meet fierce opposition from Japanese farmers, businessmen and workers. On the U.S. side, the Carter Administration must win some significant concessions from Japan soon, or Congress may enact highly restrictive limits on Japanese goods sold in the U.S. At week's end Ushiba was headed back to Japan for consultations, and officials in the Japanese government were mentioning Jan. 20 --the day after Congress returns from its holiday recess--as a deadline for coming up with concessions that Washington can take seriously. It is a deadline that Japan would do well to meet.

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