Clinton to Tokyo: No Deal

By Richard Lacayo

It was really no surprise that last week's meeting between Bill Clinton and Japanese Prime Minister Morihiro Hosokawa ended with sour expressions -- for % eight months the two nations have failed to agree on how to measure progress in Japan's efforts to open its markets. But given the tradition of smoothing over differences at the close of most summits, the unvarnished frankness at the final bow of this one was something new. At a joint press appearance, with Hosokawa at his side, Clinton let loose. Japan's markets "still remain less open to imports than any other" major nation's, he said. Japan still "screens out many of our products, even our most competitive products." Clinton's summation was startlingly blunt: "It is better to have reached no agreement than to have reached an empty agreement."

"What you saw today was the ending of the former U.S. policy of trade insanity," said a senior Administration official. "That is, doing the same thing over and over again and expecting a different result." The meeting was the first of the biannual summits required under the trade agreement signed in Tokyo last summer by Clinton and former Prime Minister Kiichi Miyazawa. The pact aimed at trimming Japan's trade surplus with the U.S., which has jumped to a near record $60 billion. Last summer's agreement called for "objective criteria" for measuring progress, and the sticking point ever since has been each side's differing notion of what objective criteria may be. To the White House, the term refers to numerical targets by which to measure the openness of Japanese markets -- the ratio of imports to total GNP is one gauge the U.S. has discussed. The Japanese scorn that approach as "managed trade," saying it would amount to permitting the U.S. to establish import goals for its products in Japan. They prefer vague promises to do better.

Two weeks ago, when it became apparent that last-ditch trade talks in Washington were breaking down, Hosokawa quietly dispatched a high-level envoy to head off a conflict. When that failed, he sent an even higher intermediary, Foreign Minister Tsutomu Hata. But a Thursday breakfast meeting between Hata and U.S. Trade Representative Mickey Kantor was ended abruptly by Kantor, who complained that Hata had brought nothing new. After Hosokawa arrived later that day, Hata asked for one last, late-night session. But after three more hours of talks that broke up at 4 a.m., there was still no progress.

Nothing in American public opinion discouraged Clinton from continuing the hard line later that day. Standing up to Japan never hurts an American President, especially one trying to escape an image for indecisiveness in foreign affairs. Meeting with Hosokawa at the White House, with Vice President Al Gore, National Security Adviser Anthony Lake and Secretary of State Warren Christopher present, Clinton told the Prime Minister they might be so far apart that there was not much more to discuss.

The two nations did manage to agree on measures to discourage North Korea from developing nuclear weapons, assist poor nations with population control, fight AIDS and rebuild the despoiled environment of Eastern Europe. The irony of the split on trade is that Clinton and Hosokawa are similar politicians, and the Prime Minister came to the U.S. with a number of domestic achievements calculated to make the White House happy, including a difficult agreement in the Japanese parliament on a $141 billion package of tax cuts and other measures designed to stimulate Japan's weakened economy. Although Washington was disappointed that the tax cuts would be rescinded after one year, the package could still help Japanese consumers buy imports.

The real showdown is just starting. Within hours of the farewell press conference, the White House was insisting that the postsummit breakfast on Saturday would be a purely social affair, with further negotiating ruled out indefinitely unless the Japanese change their position on numerical targets. With that unlikely, trade sanctions against Japan become a real possibility. "I have no idea what will happen from here on," Clinton said at the press conference. But he already has some ideas.

With reporting by David Aikman/Washington and Edward W. Desmond/Tokyo