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                                                                                BUSINESS, Page 38

TRADE

Blame It On Japan


In the wake of Bush's trip to Tokyo, "Buy America" once again
emerges as a war cry for the nation's unemployed

By BARBARA RUDOLPH -- Reported by Dan Cray/Los Angeles and Barry
Hillenbrand/Tokyo


    The 11 men and women who sit on the Los Angeles County
Transportation Commission had a simple, straightforward
assignment: determine which of two competing bidders, Japan's
Sumitomo Corp. or Idaho's Morrison Knudsen, would do the best
job manufacturing rail cars for the county's new transit system.
In mid-December the commission voted 7 to 4 to award $122
million to Sumitomo for the job. But that was before President
Bush made his ill-starred trip to Tokyo to wrest trade
concessions from the Japanese and a shrill chorus shouting "Buy
America" began to drown out all others on the L.A. commission.
"No loyal American would hand over that contract to the
Japanese," said Nate Holden, an L.A. city councilor. Last week
the commission yanked the contract back from Sumitomo in a bald
effort to save American jobs, and in a move almost certain to
complicate the situation, Los Angeles tentatively decided to get
into the rail-car manufacturing business itself, with an option
to construct a $49 million factory. All contract winners will
be required to keep 70% of the labor inside the U.S. and fully
60% within the borders of Los Angeles County. Crowed city
councilman Joel Wachs: "This will reverberate around the
country."

    When Hiroshi Yamauchi, the president of Nintendo, bid $100
million to buy the Seattle Mariners baseball team last week,
baseball commissioner Fay Vincent all but dismissed the offer,
saying it was "unlikely that foreign investors" would win
approval. Although by week's end Vincent had softened his
position, his initial reaction reflected the nation's mood. In
Japan-battered Michigan, where antagonism runs deep among
autoworkers, U.A.W. Local 900 in Wayne made its own small stand
for America last week, pushing foreign cars to a back parking
lot at the local Ford plant. Around the nation, companies are
offering incentives to workers who buy American cars. Monsanto,
for example, will pay $1,000 to every one of its 12,000 workers
who buys a car made in North America (or in one of Japan's
American factories, such as Honda's Ohio plant or Nissan's
Tennessee plant).

    Much of the resentment, of course, is fueled by the
seemingly endless recession. Bush's Tokyo foray, in which the
enduring -- and symbolic -- image was of the American President
collapsing into the lap of the Japanese Prime Minister,
intensified American feelings of anger and humiliation. Pat
Buchanan, whose New Hampshire stump speech includes numerous
nods to his isolationist "America First" economic platform, fans
the flames. "We're on a wave of Japan bashing that is much more
serious than in previous years," concludes I.M. Destler, a
visiting fellow at the Institute for International Economics in
Washington.

    The growing enmity is not entirely one-sided. Yoshio
Sakurauchi, a veteran politician who heads the prestigious but
largely ceremonial post of speaker of Japan's House of
Representatives, said last week that "the root of the ((trade))
problem lies in the inferior quality of U.S. labor. The American
worker doesn't work enough but wants high pay. About one-third
can't even read." (In fact, about 15% of the adult work force
would be considered functionally illiterate, meaning that they
are unable to adequately perform in their job.) Stooping to
Sakurauchi's level of discourse, Michigan Senator Donald Riegle
shot back, "His attitude in slandering American workers was the
same view the Japanese held the day their warplanes struck Pearl
Harbor. Their arrogance was gone by 1945 when they learned the
full measure of America's capability."

    The Japanese seem ambivalent about the escalating tensions
with America. "Japan's view of the U.S. is in a dangerous
balance," says Yukio Okamoto, a former Foreign Ministry official
who heads his own consulting firm in Tokyo. "The feeling that
Japan needs to cooperate with the U.S. still remains strong, but
at the same time there is a sense that the U.S. is being selfish
and blaming everything on Japan." To a large extent, Japanese
who lived through World War II, now in their mid-50s and older,
feel indebted to the U.S. People in their 40s tend to be the
corporate warriors, who wonder why they are criticized for
working so hard. Only Japanese under 40, who grew up with
American rock music and Hollywood movies, identify with American
criticism of their country. Says a 30-year-old management
consultant: "Even if what the U.S. is saying seems unreasonable,
we can understand that we are disliked because we work too hard
to go to the head of the class."

    The waters between the U.S. and Japan were further roiled
by the latest trade statistics, which show a dramatic jump in
Japan's overall trade surplus, up 84% to $78.23 billion for
1991. But while the numbers gave some Americans a ready excuse
to decry Tokyo's trade practices, in fact Japan's surplus with
the U.S. alone increased by a modest 1%, to $38.45 billion.
Since 1987, the U.S.-Japanese trade gap has actually narrowed
by nearly $14 billion.

    While there is little doubt that many Japanese companies
continue to pursue an aggressive export strategy, it is far less
clear whether their home market is rigged against foreign
competitors, as their critics charge. Many American executives
argue that Japan's interlocking company relations and
complicated distribution system pose an unfair burden to
red-blooded American business. Why, they ask, do three Japanese
glassmakers control nearly all of the $2 billion sheet-glass
market in Japan despite efforts of American producers to sell
quality products there? A recent study by the American Chamber
of Commerce in Japan concluded that an exclusionary distribution
system is just one of many problems facing foreign companies in
that country, where real estate is expensive and labor is in
short supply. Still, the Japanese market has become increasingly
open to foreigners.

    No mainstream economist believes that the kind of
full-blown protectionist response demonstrated by Los Angeles
last week would do anything beyond saving some jobs in the short
run. Ultimately, most contend, consumers would pay the price of
a trade war, with scarcer and more expensive imports.

    In any event, the American and Japanese economies are
inextricably linked. The U.S. could not manage without Japanese
capital to help finance its budget deficit. Nor could Japan
prosper without an American market in which to sell its
high-quality consumer goods. Most American politicians and
businessmen understand that a system of free and open trade
remains the best bet for global prosperity. But when American
workers feel besieged by the Japanese, that rational message is
drowned out by a chorus calling for retribution.