In Need of a Break

By EDWARD W. DESMOND/TOKYO

The old routine was simple: Uncle Sam stamped his feet in anger over Japan's huge trade surplus, and a smiling Japanese Prime Minister turned up in Washington with vague promises to buy American -- or at least to sell fewer Toyotas in the U.S. When Prime Minister Morihiro Hosokawa arrives in Washington this week, he will undoubtedly be smiling, but whether he will accommodate Bill Clinton's demands that Japan back its vows with hard numbers is another matter. The advance men for both leaders have spent seven months talking trade, but so far all they have achieved is frustration, while Japan's trade surplus has grown to near record levels of $50 billion. Sounding a warning last week, Mickey Kantor, U.S. trade representative, said the U.S. might have to seek "other options," a clear allusion to the possibility of trade sanctions.

Clinton's negotiators are more determined than their predecessors to win ironclad agreements that virtually guarantee deeper U.S. access to the most sheltered areas of the Japanese economy, notably telecommunications, medical supplies, insurance and cars. But Tokyo's bureaucrats are just as resolute in holding off the assault when Japan is suffering through its worst recession since World War II.

The question before Clinton is whether to come down hard on Hosokawa, who in many respects stands for what Washington wants in Japan. The highly popular Prime Minister is committed to ending political corruption and trimming the vast web of economic regulations that inhibit imports, push up consumer prices and infuriate the U.S. His seven-party coalition has surprised many by conquering two of the unscalable peaks in Japanese politics: opening the rice market and passing laws to reform the electoral system. What some in Washington fear is that taking too tough a line might destroy Hosokawa's fragile hold on power.

Last week the Prime Minister's grip weakened when the Social Democrats, the largest party in his coalition, threatened to quit over a new plan to cut taxes $55 billion this year and impose a new 7% "national welfare" sales tax in 1997. The changes were part of a $138 billion package to fire up the economy and satisfy Washington's demands for a strong boost to consumer spending. The Social Democrats rebelled at the new tax, which Hosokawa had adopted under pressure from the tightfisted Ministry of Finance, and forced the Prime Minister to abandon the plan. The fiasco brought his government close to collapse and gave Hosokawa a good excuse to ask Washington's indulgence when he meets Clinton.

But if the President sets aside trade differences at the summit, he risks the charge that U.S. strategy is a paper tiger. At the G-7 summit last July, Clinton insisted that negotiators work out "objective criteria" -- some kind of measurable goals -- to gauge Japan's progress toward more open markets. Tokyo never liked that agreement, and has argued hard that Clinton's idea amounts to guaranteeing the success of American products in Japan. In the past there was considerable popular support in Japan for U.S. trade arguments, but there is none for objective criteria, not even by Hosokawa.

If Clinton hopes to persuade Japan that he is serious about setting firm goals for imports, he may have to threaten to impose trade sanctions. But knocking heads is not what Bill Clinton enjoys doing, especially with like- minded thinkers such as Hosokawa. Tokyo is counting on that.

With reporting by DAVID AIKMAN/WASHINGTON