Has Tokyo driven Clinton too far?

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The Independent Online
Cast your mind back to an unfortunate evening in Tokyo in the autumn of 1991 and you will remember that this is a trade war that should not be happening. George Bush is throwing up in the laps of his hosts during a dinner at the end of a special trade mission to Japan in the company of motor industry executives from Detroit. A ghastly moment indeed for the former President. However, he was to leave for home with an important gift: a promise from the Japanese manufacturers that they would double their purchases of American car parts.

But guess what? The deal was a dud. Not long into the Clinton presidency, the Japanese began to admit they had made a mistake in agreeing to the new formula and would not be honouring it. It was snub to the United States that was almost bound to have most damaging consequences. For more than two decades, the US had been trying in vain to prise open Japanese markets - whether in cars, rice or semiconductors. With depressing regularity, promises were made by Tokyo and almost as quickly either circumvented or ignored. Where one barrier was seemingly eradicated, another would spring up.

In President Bill Clinton, the Japanese have from the start faced an especially dangerous adversary. Even in his days campaigning for the White House, Mr Clinton set a new kind of foreign policy agenda in which economic relations would take primacy. He told voters that one route to creating new jobs and prosperity in the US was by forcing fair trading arrangements with the other economic powers, Japan in particular. It is a position he has stuck to with remarkable consistency, thanks in part to the urgings of two of his key government officers - Mickey Kantor, the trade negotiator now hammering the table in Geneva, and his chairwoman of the National Economic Council, Laura Tyson. Both are fervent about bringing Japan to book for its practices.

And the politics of taking a firm stand remain as compelling as ever. As the 1996 presidential cycle approaches, Mr Clinton needs desperately to harden up his image in the foreign arena. Japan is a much cleaner target than the morass of Bosnia. And there are some important electoral calculations involved. With both Texas and California looking bad bets for Mr Clinton when the country votes next year, he must secure support in the blue-collar Midwest and especially in populous Michigan, where the US car industry is based.

So when Mickey Kantor hauled the Japanese back to the negotiating table to discuss car parts all over again nearly two years ago, the clash that is upon us now was eminently forseeable. And come the spring of this year, the temptation to force a confrontation was overwhelming. Japan was looking vulnerable with a weakening economy and troubled government. Meanwhile, trade figures for April saw a renewed surge in the US-Japan trade deficit, reaching a staggering $11.4bn. It was time to strike.

So long has the history of squabbling with Japan been, however, that when, finally, the trade sanctions against its luxury car sector were wheeled out in mid-May - Clinton was in Moscow at the time celebrating the VE Day anniversary - it took a while for the implications to sink in. And anyway, implementation of the tariffs was delayed until today to allow for last-ditch negotiations. Many observers concluded that another fudge would be found.

Reaction was swift, however, among the 7,000 US dealerships that sell the cars targeted by the tariffs and who stand to be put out of business. While at first they enjoyed a mini-boom in sales as customers rushed to beat the sanctions, they have since watched in dismay as the talks have dragged on with little sign of progress. Last week a delegation of dealers travelled to Tokyo to report that the Clinton administration was not going to blink. "This dispute isn't about autos," said Walter Huizenga, president of the American International Dealers Association. "It's about rice, lumber, cellular phones."

In other words, Mr Clinton is ready to take this issue to punish Japan for all the years - decades - of broken promises. Who knows where it will end if nothing is settled in the next few hours in Geneva? An all-out trade war? The return of Mr Clinton to the White House? Maybe both.

David Usborne

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