BUSINESS, Page 54Special Report: Does Japan Play Fair?Is the Door Open Wide Enough?Despite much talk of global neighborliness, more push is neededBy Edwin M. Reingold
The root of the problem may be a failure to communicate.
Washington's message of rising frustration, and even anger, over
Japan's trade practices is being received in Tokyo with chagrin and
incredulity. The reason for the perplexed reaction is that the
flurry of Japan bashing in the U.S. comes at a time when the
Japanese feel they have made historic changes for the better in
their restrictive and protectionist policies. Japanese politicians
and business leaders insist that the old ways have been replaced
by an expanding spirit of openness and global neighborliness.
Kokusai-ka, the Japanese term for internationalization, has become
a watchword at the Ministry of International Trade and Industry,
which led Japan's industrialization and trade drives and once was
instrumental in blocking foreign goods from Japan.
While most Americans believe Japan's trading manners are still
dangerously one-sided, the Japanese offer some impressive evidence
that they are trying to play fair. Japan has the lowest average
tariffs of any developed country, will rank as the world's largest
foreign-aid donor in fiscal 1989, and is host to hundreds of U.S.
firms that have captured a profitable share of its market. In some
businesses -- fast food, soft drinks, razors, cancer insurance and
disposable diapers -- American companies control the largest shares
in the Japanese marketplace. IBM, the biggest U.S. business in
Japan, posted sales of $9.3 billion there last year, up 12% over
fiscal 1987. Says Takeshi Isayama, director of the Americas
division of MITI: "The U.S. Government tends to listen to those who
fail in Japan rather than all those who succeed."
Japan has moved a long way from its closed-door past. For much
of the postwar era, Japanese politicians built on their
resource-poor nation's sense of vulnerability as a rationalization
for outright protectionism and discrimination against foreign
goods. When the economy was still a fragile blossom sprouting in
a war-devastated landscape, that was tolerated by Western
countries. At the same time, Japan developed a socioeconomic system
that guaranteed full employment -- there was neither the money nor
the will to finance a public dole -- by means that created a stable
business climate but were foreign to Western free-market ideas. The
Japanese way of doing things included subsidies for employers, a
complicated system for distributing goods, and government-enforced
product standards that foreigners found impossible to meet.
By the mid-1980s, however, that one-way trading mentality had
fostered such huge financial imbalances with the U.S. and other
countries that Washington pressured Tokyo into adopting a blueprint
for economic change. The plan, under which Japan pledged to
stimulate domestic spending so that exports would no longer lead
the economy, has achieved dramatic results. During 1988, imports
rose 33.4% over the previous year, to $187.4 billion. Japan
increased imports of auto parts, electronic products, medical
equipment and pharmaceuticals. Purchases of foreign-built cars last
year rose 37.1% over 1987, to $3.1 billion. Toyota's domestic sales
went up 13%, while its exports grew a mere 2.5%.
The Japanese are dismayed that politicians in Washington and
many U.S. businessmen brand Japan as "protectionist" whenever some
products fail to sell in Japan, even though the market is opening
up. U.S. sales of telecommunications equipment in Japan, for
example, reached $263.3 million last year, up from $106 million in
1985. Yet the U.S. is basing its current trade complaints at least
partly on the problems Motorola has faced in getting frequency
clearance in Tokyo for the cellular telephones it is selling in
Japan; Tokyo considers the grievance too small to justify the
hubbub surrounding it. Observes Peter Tasker, British author of The
Japanese: "Japan is not alone in some of these disputes. Try
selling telecommunications to the French."
Some pundits who believe Japan is failing to make quick enough
progress suggest that the country will need far more pressure from
the outside. James Fallows, author of More Like Us: Making America
Great Again, contends that the Japanese economy is chronically
biased in favor of corporate profits and investment abroad at the
expense of the Japanese consumer's living standard. Example: the
Japanese have only recently begun to do away with mandatory
Saturday office hours. Dutch journalist Karel van Wolferen, in his
recently published book The Enigma of Japanese Power, argues
similarly that Japan is run by a near conspiracy of Big Business
and bureaucracy, whose only concern is to expand global market
share.
Tokyo lacks the leadership to launch the kind of overnight
reforms that would convince U.S. politicians that they were being
heard. A Japanese Prime Minister does not carry the clout of an
American President or a British Prime Minister; the ability to
decree change is limited. The Recruit bribery scandal has virtually
paralyzed the lame-duck administration of Prime Minister Noboru
Takeshita at a critical moment in U.S.-Japan relations. Says an
official in the Foreign Ministry: "We have a first-rate economy,
a second-rate standard of living and third-rate politicians." But
the Japanese are beginning to look for stronger leadership.
Cultural anthropologist Masao Kunihiro says that during a recent
lecture tour he found voters "increasingly becoming aware of
international affairs"; eventually, he suggests, "they will choose
more genuinely international minded politicians."
For all their recent progress, the Japanese could do more to
open their market and reduce the stubborn trade gap with the U.S.
While the government has cleared the way for more imports of U.S.
beef and citrus products, bans on purchases of American rice are
being retained. Says a Japanese diplomat, in specific reference to
a U.S. barrier: "We'll do rice when the U.S. does sugar."
The Japanese point out, with some justification, that the trade
deficit is as much the fault of America's bad habits as the result
of Japan's economic policies. Says former Foreign Minister Saburo
Okita: "The Americans should take a second look at themselves.
Obviously they cannot go on with runaway spending forever." The
U.S. borrowing-and-spending binge, which involves both Government
and consumers, has boosted the tide of imports to the U.S. The
Japanese also complain that the U.S. has leadership problems of its
own. Washington has been sending out conflicting signals because
trade policy is shaped and shared by several Government departments
-- including State, Defense and Commerce -- that are often at odds.
The dispute about whether to scrap the agreement for joint
U.S.-Japan production of the FSX jet fighter, in which the Defense
and Commerce departments were squaring off before President Bush
decided to go through with the deal, annoyed the Japanese because
their trustworthiness was so openly debated.
A fundamental problem in U.S.-Japanese relations is that the
two countries have different concepts of how an economy should
work. Americans and Europeans continually tell Tokyo that they want
"fair" trade, which at its simplest means equal access to the
market. The notion carries moral overtones that do not necessarily
jibe with the Japanese view of the world. Kyoto University history
professor Yuji Aida recently wrote that "the American
predisposition to view things in simplistic black-and-white terms
is antithetical to our mind-set. Whereas the U.S. was founded by
a people convinced of a single, revealed truth, Japan's long
history has taught us that in the realm of human behavior there is
no absolute right or wrong."
Then what is the correct path? Since the two economies have
become closely interwoven through joint ventures, investment and
trade, the health of the total relationship has become far more
important than one-upmanship by either country. As Aida writes,
"The leitmotiv of Japan is not saints and villains engaged in
mortal combat, but morally complicated human beings living
together, confronting and battling one another from time to time,
but ultimately yielding, compromising and coexisting in harmony."
If Japan can extend that philosophy to its economic partners,
relationships will thrive. In fact, the talk of Japanese
internationalism is more than sentimental optimism. Says author
Tasker: "They may not create their own momentum for change. They
have to be pushed, but when they move, they move." The U.S. ought
to give Japan greater credit for movement, even as it keeps up the
