Is Washington in Japan's Pocket?

By WALTER SHAPIRO

Washington is a city of midlife compromises. Bright-eyed young men and women flock to the capital, as they have since the New Deal, not because they want to make money but because they want to act on their political beliefs. They enter government; they master a specialty; they amass a Rolodex. Then maybe their party loses power or they find themselves lusting after a BMW on a bureaucrat's salary. Suddenly the former idealists are in the private sector, bartering what they learned in government in their new roles as lawyers, lobbyists, public relations consultants or (to use an old-fashioned term) influence peddlers.

Washington writer Pat Choate, 49, until recently a policy analyst for the $7 billion conglomerate TRW, knows this world well. "What I'm doing," he says, "is questioning people's motivations. And that's something that isn't done in this town."

Choate's latest book, Agents of Influence (Knopf; $22.95), an impassioned, sometimes shrill, but always well-documented expose of Japan's lobbying muscle in Washington, will not be published for two weeks. But already the bearded and earnest economist is becoming the most divisive figure in Washington since Robert Bork. For Choate, in his book, identifies dozens of former top U.S. officials and politicians (such as Elliot Richardson, Stuart Eizenstat and Charles Manatt) whose firms represent Japanese clients, and he raises serious questions about the ethics of that practice.

The book's thesis is stark: "The manipulation of America's political and economic system by Japanese and other foreign interests has reached the point that it threatens our national sovereignty." What distinguishes Choate from other recent critics of Japan is that he is, at the core, a moralist; to him, the avidity with which former government officials are willing to work for foreign interests symbolizes the erosion of America's "civic virtue." His is a critique of the familiar, entirely legal, Washington revolving door, recast in patriotic terms.

Choate has paid a personal price for his apostasy. In August he was fired after, he says, TRW chairman Joseph Gorman told him, "We fear the Japanese will feel that this book represents TRW's positions and it will jeopardize our business." True, there are compensations: Japanese rights to Choate's book sold for $310,000.

A lengthy extract in the Harvard Business Review prompted a fusillade from fervent free-traders. New Republic columnist (and TIME contributor) Michael Kinsley broadly hinted that Choate, despite his denials, was engaging in "McCarthyism" with "his easy accusations of disloyalty, his imagery of infection of the body politic, his woozy mixture of falsehoods, half-truths and exaggerations." Hobart Rowen, a Washington Post columnist, called Choate's theories "pure poppycock."

Choate's defenders are equally combative. In a forthcoming letter to the Harvard Business Review, Chrysler chairman Lee Iacocca argues, "If an American CIA agent quit one day and went to work for a foreign intelligence service the next, we'd call it treason. But when American trade officials . . . defect in droves to the Japanese, we don't even bat an eye."

Choate will begin his book tour this week by testifying before the Senate Commerce Committee about Japanese influence in the U.S. But before the book itself disappears in a tidal wave of controversy, it is important to sort out what Agents of Influence actually proves and what remains disturbing supposition.

Choate's strength is his painstaking documentation of the $100 million-a- year Japanese political juggernaut in the nation's capital. Japanese interests currently retain almost as many Washington lobbying, public relations and law firms as those of Canada, Britain and the Netherlands combined. Since 1973 one-third of all former top officials in the Office of the U.S. Trade Representative have registered as foreign agents, mostly for Japanese companies. The pattern is repeated among refugees from federal agencies like the International Trade Commission. Even trade negotiator Carla Hills and her two top deputies represented Japanese clients before they joined the Bush Administration.

But what effect has this phalanx of expensive lawyers, lobbyists and former public officials had on U.S. trade policy? Even if they have tilted the balance of policy decisions, is this automatically inappropriate -- especially since the Japanese are often allied with domestic free-traders?

The book recounts a wide variety of trade disputes -- from the inequitable pricing of imported TV sets in the 1970s to the jury-rigging of tariff duties on light trucks in 1989 -- in which Japanese interests prevailed against domestic manufacturers. Choate keeps a running scorecard on the paid lobbyists and tries valiantly to follow the paper trail, but in the end he he fails to develop a compelling theory of causation. He can only speculate that in effect money talks in Washington. Part of his problem is that Japan has natural allies within the government. As Choate himself asserts, the Treasury Department has historically been committed to free trade, and the State Department has been willing for geopolitical reasons to go to extremes to keep Japan happy. Lobbyists, in short, may be superfluous when the Japanese automatically have half the Cabinet on their side.

Indisputably, because of their economic success, the Japanese can afford to be the high rollers of Washington lobbying. But this does not necessarily mean -- as Choate implies -- that Washington lobbying is responsible for Japanese prosperity.

That is why Agents of Influence is on firmer ground when it highlights the corrosive effect that this Japanese money has had on the political culture of Washington. "The revolving door is creating a cadre of officials whose views on trade matters have been shaped largely by their advocacy on behalf of Japan," Choate writes. He also correctly intuits that some U.S. officials go out of their way to ingratiate themselves with Japanese companies in hopes of future reward. If Ronald Reagan could be rented with a $2 million speaking fee in Japan, obscure Commerce Department deputies are not immune to temptation.

But Choate might have depicted the motivations of his agents of influence more artfully if he had been willing to confront them face to face. "I couldn't write this book from interviews," he says. "I could only do it from documents. If I didn't have it in writing, with their signature on it, I didn't put it in." What Choate missed with his dogged but reclusive methodology were not facts, but nuggets of insight into self-justifications common in Washington.

Choate never talked to Harald Malmgren, a top trade official with the Nixon and Ford administrations, whom the book describes as the trailblazer in working for the Japanese. In 1977 Malmgren received a $300,000 payment from Japanese TV manufacturers for helping them avoid crippling import duties for selling their sets below the cost of production. This dumping case, Choate argues, hastened the death of the American electronics industry. Malmgren now calls his fee "a reasonable salary for my time but not what I would have gotten had I gone into investment banking." Malmgren has no regrets; he argues that domestic TV manufacturers were already imperiled by other Japanese rivals, who had built American plants. "Had we lost," he says, "those Japanese companies probably would have just creamed their U.S. competition faster."

Agents of Influence is a brave and provocative book, but there is a danger that the battles it will spark will be fought on the wrong terrain. The central issue should not be Japan bashing or any overheated conspiracy theory about why American companies are losing their market share. Even Choate's outrage over the ease with which former U.S. trade officials switch allegiances in the private sector is part of the larger struggle over revolving-door ethics in Washington. Rather, the fascinating question that Agents of Influence raises but does not answer is, What are the demands of patriotism in a world where global economic rivalry has replaced the cold war?

Is it ethical, say, for an American to work on behalf of Canadian companies but not Japanese ones? Or is any country acceptable as long as it practices democracy? Then what about Saudi Arabia? Or new Persian Gulf allies like Syria? The moral answer is, as it always has been, that patriotism does matter, that American jobs matter, and that the economic as well as political future of the nation matters. Americans who work to advance the causes of foreign governments or corporations have an obligation to be wary that their activities do not harm the national interest. A global economy is no excuse for continuing to tolerate a laissez-faire ethical climate in which all of Washington is available to the highest bidder.