US is spoiling for a fight on import barriers: America and Japan are on the brink of a trade war, reports from New York and Tokyo confirm

INITIAL EFFORTS by the Japanese prime minister, Morihiro Hosokawa, to prevent a damaging trade war with the United States appear unlikely to satisfy the Americans, who made it clear again on Friday that they are spoiling for a fight over Japan's import barriers.

Officials in Washington, when asked about the new list of 'voluntary' measures Mr Hosokawa requested from his government, said the proposals appear to be a restatement of 'the empty pledges that weren't good enough the first time around'. US trade experts say the Clinton administration - complaining of Japanese cynicism with respect to early agreements, and emboldened by the relative strength of the American position - is determined to wrest 'quantifiable guarantees' on market access from Tokyo this time.

The US is not insisting on 'numerical targets', Bowman Cutter, deputy US trade representative, said, but it does want both a macro-economic commitment to reduce Japan's current account surplus with the world and 'a commitment to genuine openness in individual markets'. He added: 'Those two things are all we want. But that is what we want.'

This is hardly the first time the US has used the threat of sanctions - in this case, dollars 300m ( pounds 200m) worth of duties against cellular phones and probably other consumer electronics products - in an attempt to redress supposed 'under-importing' by the Japanese, which by some estimates totals dollars 200bn annually. Twenty separate attempts to pry open the Japanese domestic market have been initiated since 1978, the year the US trade deficit with Japan first topped dollars 10bn.

But in contrast to earlier efforts the Americans this time seem far more willing to take their threats to the brink of an all-out trade war, apparently confident that the growing US economy can better withstand a confrontation than can the Japanese. Support for Mr Hosokawa's resistance to the American demands has already been eroded by the jump in the yen in the past week, a trend US Treasury officials did nothing to discourage.

The rise in the yen towards a rate of 100 to the dollar - 'the ultimate trade sanction' as one economist put it - threatens to offset the entire effect of Mr Hoskawa's economic stimulus package and devastate the country's exporters. Japanese cars sold in the US, for example, are already selling for dollars 2,000 more than their Detroit rivals. By one estimate, less than 5 per cent of Japanese exporters will cover their costs at Friday's closing rate of 104.58 yen to the dollar.

Washington also is far less worried than it once was about Japan's scope to retaliate against sanctions, which will not be announced until St Patrick's Day on 17 March and would not come into effect for another three months. The rebound in US high technology has meant American industry is less dependent on Japan for key components like computer chips (although there is some concern about a potential shortage of colour screens for PCs).

Perhaps most importantly, Japanese financial institutions, which bought more than one- third of the US government debt sold at some Treasury refunding auctions in 1988, now account for less than 10 per cent of the market. The probability that the Japanese may now respond by dumping US bonds to drive up interest rates 'is so low as to be a very, very far-fetched contingency', Mr Cutter said.

Mr Clinton's critics say Washington is resorting to a 'primitive form of mercantilism' in using exchange rates to weaken Japan's resolve and warn about the long-term dangers of competitive devaluation. But frustrated American trade negotiators, past as well as present, defend the administration's hard-ball tactics, citing Japan's record of signing liberalisation agreements only to circumvent them.

Clyde Prestowitz, the Reagan-era negotiator who has become one of Japan's harshest critics, notes that Japan's trade surplus with the US has persisted since the late 1960s despite growth and recession in Japan, a long boom in the US in the 1980s followed by five years of stagnation, the rise and fall in the Tokyo stock market and a sizeable shift in exchange rates - particularly since the 1985 Plaza accord, when the yen was worth roughly half what it is today in the US.

The story of how Motorola was denied access to the Tokyo- Nagoya market, by being coupled with a firm already committed to NTT cellular technology, is only the latest in a long series of apparently cynical manoeuvres.

US negotiators have tried a variety of sectoral approaches, receiving pledges to deregulate industries, to encourage foreign buying and even to guarantee imported products a certain market share.

These, along with macro- economic approaches like the structural impediment talks, the 1986 Maekawa initiative to stimulate domestic consumer demand and the Plaza accord, have, however, failed to budge Japan's persistently low rate of imports - 6 per cent of GDP.

President Clinton, however, seems prepared to press his advantage regardless. 'They simply cannot continue to pursue the policy they pursued when they were a poor country growing rich,' he said on a popular New York radio programme. 'They are a rich country now, and they can't export to the world while keeping their own markets closed. And I think they know that.'

(Photograph omitted)

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?