Time - Man of the Year/Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso/moy/012092/0120100.000

Text File | 1992-08-28 | 10KB | 208 lines

                                                                                NATION, Page 14

TRADE AND POLITICS

Mission Impossible


Bush's goal in Japan was "jobs, jobs, jobs" via greater U.S.
sales. What he got was some promises -- and a bug that gave
the world a scare.

By MICHAEL DUFFY -- Reported by Barry Hillenbrand and Kumiko
Makihara/Tokyo and Walter Shapiro with Bush


    It isn't easy to single out the low point of the trade
mission to Japan that George Bush completed last week. Was it
that his pleas for stepped-up Japanese purchases of American
auto parts belittled the presidency and made him seem the tool
of overpaid corporate CEOs? Or that the largely unenforceable
agreements he reached were soon denounced as inadequate by the
U.S. automobile executives who accompanied him on the journey?
Or did the nadir come when the President threw up on the
trousers of Japanese Prime Minister Kiichi Miyazawa and then
passed out at a state dinner in Tokyo?

    The spectacle of Miyazawa cradling the prostrate leader of
the free world in his lap was doubly unsettling and sent
shudders around the globe. White House spokesmen assured the
public that Bush was suffering from nothing more serious than
exhaustion and a stomach-churning touch of gastroenteritis.
Still, the brief fainting spell brought to the fore concerns
about the President's health and reminded voters that Dan Quayle
remains only a heartbeat away from the Oval Office. Far worse
for Bush, the image was an obvious metaphor for the American
economy: flat on its back, seeking succor from a resurgent
Japan.

    That was not the pose Bush meant to strike when he
embarked on the star-crossed 12-day journey to Australia,
Singapore, South Korea and Japan. Planned last November as a
routine diplomatic swing, the trip was hastily converted by
White House officials into a full-blown trade mission after
growing public dissatisfaction with Bush's handling of the
recession triggered a steep drop in his approval ratings. In an
effort to counter criticism that he cares more about foreign
policy than the woes of unemployed Americans, Bush proclaimed
the trip was about generating "jobs, jobs, jobs." As he
explained in an interview just before his departure, "I'll do
what I have to do to be re-elected."

    He should have stayed home. The President's call for free
trade boomeranged in Australia, where farmers were quick to
point out that export subsidies for American grain prevent wheat
grown Down Under from being sold competitively in the world
marketplace.

    Once he got to Japan, Bush's odyssey degenerated into the
trip from hell, as the President was forced to endure politely
phrased, but nonetheless pointed, reminders from his hosts about
America's shortcomings. During a joint press conference with
Miyazawa, Bush sat silently as the Japanese leader ticked off
a list of domestic woes that have damaged American
competitiveness: from homelessness and the AIDs epidemic to a
decline in education. Though Miyazawa added, "Since Americans
themselves are aware of these problems, I am convinced they will
overcome these problems," Bush looked a bit like an overextended
borrower sitting through a condescending lecture from an
impatient loan officer.

    Miyazawa, fearful of adding to growing anti-Japanese
sentiment in the U.S., did not want to send Bush home
empty-handed. But the bargain struck in Tokyo will do little to
cure the recession, create new jobs, or narrow the $41 billion
U.S. trade deficit with Japan over the long term. Under pressure
to open their markets, the Japanese agreed in the final hours
of Bush's tour to find ways to buy more American cars, auto
parts, computers, glass and paper. Some of these concessions
were in the works long before Bush arrived; others sounded good,
but were less than met the eye.

    For example, Bush claimed that Japanese automakers' pledge
to double their purchases of U.S-made auto parts to $19 billion
will create 200,000 U.S. jobs. But $15 billion worth of the
components will be used in Japanese auto plants in the U.S., not
exported to Japan. Even the $4 billion in parts that are shipped
to Japan may eventually find their way back to America in
Japanese-assembled Toyotas, Hondas and Nissans headed for the
U.S market. Japanese manufacturers also agreed to assist
American makers in marketing American cars in Japan.

    Bush paid a high political price in exchange for this thin
gruel. By pressing Tokyo to commit itself to purchase specific
quantities of U.S. products, Bush abandoned his long-held
free-trade principles for less competitive "managed trade," in
which governments agree to pressure private industries to meet
preset goals. Trying typically to have it both ways, the
President repeatedly warned that any departure from free trade
would damage the U.S. economy, which has become increasingly
dependent on sales of American exports. Arriving in Washington
on Friday, he denied that the Tokyo accords were tantamount to
protectionism. "I don't think we're forcing anybody to buy
something," Bush said. "I don't view that as managed trade."

    Whatever the agreements are called, they are not likely to
boost U.S. auto sales in Japan significantly -- or to make a
deep cut in the unemployment rate, which rose to 7.1% in
December, the highest in 5 1/2 years. Even if U.S. cars were
widely available in Japan -- and they aren't -- it is unlikely
that many would become hot sellers. Detroit has not cared much
about the Japanese market for the past 50 years, even though it
is now the second largest in the world (52 million vehicles on
the road, in contrast to 183 million in the U.S.). Says Edward
Mertz, a GM vice president: "It really wasn't a priority."

    So far, no U.S. automaker has tried to build a car
tailored for the Japanese market. That would require a steering
wheel on the right, a shorter wheelbase to navigate the narrow
streets of Japanese cities and greater fuel efficiency to offset
higher Japanese gasoline prices. Chrysler chairman Lee Iacocca
declared last week that his company would redesign some of its
models for the Japanese market and be ready to sell them later
this year. Then there is the question of quality -- something
the Japanese are usually too polite to mention in public.
During last week's talks, Nissan president Yutaka Kume brushed
aside the suggestion that he and his colleagues had agreed to
buy American auto parts out of "charity." That, said Kume,
"would be too arrogant." But privately a Nissan official
conceded that the buying plan was "an act of goodwill."

    American buyers aren't so merciful. At the Greater Los
Angeles Auto Show last week, Rene Pacheco, a contractor who owns
three Toyota pickups because he believes their American
counterparts aren't as reliable, dismissed Detroit's latest
offerings. "Take this car here," he said, pointing to a
moderately expensive U.S. model. "Look at the paint job.
Americans are into details. If you're going to spend $25,000,
I don't want something that looks like this. The Japanese have
a better product." Similar reasoning led the Los Angeles
transportation commission to authorize the purchase of 41 light
railcars for the city's Metro Rail Green Line from Sumitomo, a
Japanese builder, though a bid from an Idaho-based manufacturer
was $5 million lower.

    Public opinion surveys have consistently shown that voters
blame American business practices more than Japanese unfairness
for the trade imbalance. The Administration often takes the
same view. During a visit to Japan in November, U.S. trade
negotiator Carla Hills conceded that America's continued
reliance on deficit spending hampers the nation's ability to
save, invest and increase productivity. "We know the federal
deficit is the problem," she said. "Too many people believe that
the trade deficit is the result of closed markets. But closed
markets are just the backdrop. Opening markets removes that
backdrop and makes the problem less emotional."

    But Bush glossed over such realities the minute he decided
to take 21 American corporate chiefs, including leading Japan
bashers like Iacocca, on the trip (only 18 made it all the way
to Japan). By doing so, Bush was making a not-too-subtle threat
to the Japanese that they could either play ball with him or
take their chances with a more protectionist Democratic
Congress. The threat was spelled out last week by outgoing
Commerce Secretary (and soon-to-be Bush campaign chairman)
Robert Mosbacher: "In the gulf war, the Japanese ended up paying
without getting any credit. If they don't do something now, they
will again end up paying without getting credit."

    Most of Bush's rivals for the White House are staking out
nuanced positions on trade. While populist Democrat Tom Harkin
and conservative Republican Pat Buchanan both talk tough about
forcing the Japanese to open their markets, Democrats Bill
Clinton, Bob Kerrey and Paul Tsongas have argued that successful
competitiveness begins at home. Clinton recently told a
working-class audience in Manchester, N.H., that Bush cannot
solve the nation's economic problems by seeking concessions from
Tokyo. The Japanese, Clinton said, will help get Bush "past the
election, but over the long run, we're going to have to
compete."

    Even good old-fashioned American competitiveness may not
be enough to crack the market in a society where stylized
rituals still predominate in business as well as pleasure. Last
week in Kyoto, Bush watched eight men in brightly colored robes
demonstrate an ancient Japanese game called kemari, in which
players use their feet to keep a large deerskin ball inside
their small circle without ever letting it touch the ground. The
object of the 1,300-year-old game is not so much to win as to
display proper form and correct etiquette. The President watched
the less-than-riveting spectacle for a while, then impulsively
threw himself into the contest. Without regard for the players'
harmony, or wa, Bush entered the circle (strike 1), hit the ball
with his head, soccer-style (strike 2), and kicked it out of
the circle completely (strike 3). At game's end, while the
Japanese players politely tried to mask their dismay, he
shouted, "We won! We won!"