To be taken seriously as a “partner,” Japan needs to show some genuine global leadership. It hasn’t. Case in point: the stalled Uruguay Round of trade negotiations. Japan could have given the talks a huge impetus–and still could-by declaring unilaterally that it would open its market completely to rice imports. Japan has a huge interest in preserving an open world trading system. Yet it has steadfastly refused to make a commitment on rice.
Our new attitude is also a delusion. It amounts to this: with the cold war won, we no longer need Japan as an ally against communism; we can attack “unfair” trade practices with gusto. The argument ignores the reality that Japan is critical to a big strategic interest we have in Asia: China. “When China wakes,” Napoleon once said, “it will shake the world.” Well, China is waking. Its booming economy is now almost four times larger than in 1978, estimates The Economist. We don’t know what China’s ambitions are–or might become. But our interest lies in the emergence of a peaceful China that joins the existing world trading system.
How we deal with Japan will affect this strategic equation. There is an alternative to China as a peaceful member of today’s world economic system. It is an Asian economic bloc, with China at its head, that would become antagonistic to U.S. interests and, possibly, a military threat. If we deal too harshly with Japan, we risk bringing this about. The more we antagonize the Japanese, the more they will strive to lessen their dependence on us. Down this path lies an Asian bloc that would, despite Japan’s present economic power, probably come to be dominated by China.
Indeed, strong forces are already pushing in that direction, regardless of what we do. Japan’s trade is shifting dramatically toward Asia. Between 1987 and 1991, exports to Southeast Asia rose from 23 to 31 percent of Japan’s total. China’s growth will probably accelerate Asian trade. Moreover, Japan has a vital interest in helping to foster China’s stability. As economist Kenneth Courtis of Deutsche Bank in Tokyo puts it: “If you are in Tokyo, what are your nightmares? One is that China becomes chaotic, and two months later you have 20 million boat people.”
The point is that our interests with Japan transcend specific trade issues. Remember that Asia is the world’s fastest-growing region; in 1992 it absorbed 29 percent of our exports. An Asian bloc-potentially discriminating against outsiders–is not in our interest. The larger issue involves the future relationship between Japan and China. They will have to accommodate each other. But do we want a technologically advanced Japan to have China as its main ally? The answer seems obvious: no.
None of this means, however, that we should subordinate our trade complaints to these “strategic” interests. In fact, Japan deserves much of the worldwide scorn it receives for its mercantilist policies. It is not that Japan has made no progress (it has) or that its huge trade surplus$133 billion in 1992-stems entirely from restrictive trade practices (it doesn’t). But a country that has benefited so much from an open trading system should rapidly and spontaneously remove its own barriers. Japan has consistently failed to do so.
As a practical matter, Japan’s market is more closed than America’s. The Clinton administration’s recent report on trade barriers identifies problems in industries ranging from medical devices to auto parts. Aside from suppliers of raw materials, Japan has trade surpluses with almost all its major trading partners. In 1991 it had a $6 billion surplus with the United Kingdom and a $7.6 billion surplus with South Korea.
No one begrudges Japan success for its quality exports, and–as Bill Powell reports on page 40–many foreign companies flourish in Japan. Still, the obstacles to entry and success remain too high. Although these barriers often involve business practices and cultural habits (and not official policies), they are sanctioned by the government’s own behavior. When Japan, the government, has an easy opportunity to open markets, it doesn’t. Rice merely symbolizes the inertia. In 1990, for instance, Japan’s government bought less than 1 percent of its mainframe computers from foreign companies.
The conclusion of many Americans (and, indeed, many Japanese) is that Japan changes only if pressured to do so. The resulting dilemma is that we must pound on Japan to open its markets, but if we pound too hard we may slowly drive Japan toward regional arrangements that subvert our long-term interests. Admittedly, all this is speculation. We can’t predict whether or how an Asian economic bloc might form. Nor can we know how China will evolve economically and politically. Finally, we can’t know whether a richer China will become a bigger military threat (though, in fact, China is now adding armaments). But the dangers exist even if they must be imagined.
The saving grace is that Japan has its own dilemma. “It is not in their interest,” says Asian specialist Edward Lincoln of The Brookings Institution, “to pull away from the industrial world.” For another 10 or 15 years, Japan might dominate an Asian bloc through its economic power. But China’s sheer size would, given continued economic growth, ultimately make it the senior partner. A Japan closely allied with the United States stands a better chance of tempering China’s power. Turning toward Asia might give Japan more independence of action now and less later.
What’s involved here is tone as well as policy. We must not let the constant tension of U.S.-Japanese relations slide into mutual contempt. In fact, both countries have common interests that are easily overlooked. If we turn too savagely on Japan’s trade practices–or if Japan takes refuge in Asia-we may both do ourselves much damage.
