Leading Article: Talk tough, but don't push Tokyo

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The Independent Online
AFTER last winter's narrowly averted trade war between the United States and Europe, it has been easy to forget the most potent source of trade friction of the Eighties: Japan's stubbornly persistent trade surplus. With Morihiro Hosokawa's point-blank refusal to accede to demands for guaranteed increases in US exports to Japan in specific industrial sectors, the surplus is once again back on the agenda. President Clinton faces a choice: to give Japan more time, or to take down the blunderbuss from the wall.

For once, the doves' traditional argument - that use of trade sanctions would weaken the hand of moderates, and thus frustrate the longer-term objectives of the United States - does not hold water. By saying no to President Clinton, Mr Hosokawa will win more respect from Japanese voters than his predecessors, who tried perpetually to paper over these disagreements. But his confidence cuts both ways; it also increases the risk that Tokyo would respond aggressively in kind.

The rights and wrongs of the trade disputes between the world's two biggest economies are hard to disentangle. Americans complain that Japan discourages imports with its combination of detailed, onerous regulations and industrial intervention. The low sales of Motorola's world-class mobile telephones in Japan are justifiably a sore point.

Yet the US is guilty of some of the sins it lays at Japan's door. Counting federal, state and local governments together, American public procurement may actually be less open than Japanese. Some US industries have been less attentive to their Japanese customers than they should be. US car manufacturers, for instance, are weakest at making cars with engines smaller than 2000cc - which account for 80 per cent of Japanese sales. Until recently, none of them sold cars to Japan with right-hand drive.

Furthermore, Mr Clinton's timing is odd. The Federal Reserve's recent increase in interest rates demonstrates that US recovery is in full spate; Japan, meanwhile, is in the trough of its worst recession since the war, with little prospect of growth this year. Much of the country's trade surplus should disappear when Japanese consumers pluck up the confidence to go back into the department stores.

Meanwhile, Bill Clinton should remember that sanctions against Japan have an uncomfortable history of hurting America. When Washington imposed huge duties on Japanese flat-panel computer screens, for instance, it was forced to leave imports of assembled computers alone. So US firms that had previously imported the screens alone were forced to start making their entire computers abroad. The moral is clear: talk tough, but think thrice before putting threats into practice.