The countries have agreed to a formula for restarting the talks aimed at reducing Japan's huge trade surplus and opening its markets to greater competition.
Under the deal, announced in both capitals yesterday, Washington has promised not to seek numerical targets for US and foreign imports into Japan to measure progress. It was this demand, thinly cloaked by the term 'objective criteria', that caused the acrimonious breakdown of the previous framework accord reached in July 1993.
The crisis came to a head in February, with the obvious failure of a summit between President Clinton and Japan's then Prime Minister, Morihiro Hosokawa, at which Mr Hosokawa publicly denounced Washington for seeking to impose a mercantilist solution of 'managed trade' in defiance of international accords.
But the US paid dearly for its tough stance. Fearing a trade war between the world's two largest economies, and convinced the Clinton administration would welcome a weak dollar to put pressure on Tokyo, the markets drove the currency lower. This forced an embarrassing international rescue effort by central banks and indirectly contributed to the recent string of US interest rate increases.
Of itself, the new agreement contains no specifics; rather, US Trade Representative Mickey Kantor said, it would 'boost confidence between the two countries to move in the right direction'. A quick first step was followed by a 14-minute congratulatory phone call between Mr Clinton and Mr Hosokawa's successor, Mr Tsutomu Hata.
But although working groups wasted no time in getting down to detailed talks yesterday on the array of disputes between them, there was no certainty they would reach concrete agreements to reduce Japan's overall trade surplus of dollars 131bn, some dollars 60bn of it with the US.
Both sides would like something to show for the talks before the G7 summit early in July, to be held this year in Naples. Neither, however, is especially optimistic.Reuse content