Clinton's warning on trade

PRESIDENT BILL Clinton left Tokyo last night after a less than friendly two-day visit, which ended with the veiled threat of a trade war between Japan and the United States.

In a blunt indication of US concern at Japan's rising trade surplus, Mr Clinton raised the spectre of the late 1980s when a flood of cheap Japanese imports created an atmosphere of resentment and xenophobia within the US. "The worst thing that can happen is if it appears that when times are tough, borders are closing up," he told American businessmen based in Tokyo. "Then you're going to have, I'm afraid, a round of retaliatory protectionism. I'm quite worried about this now."

Despite formulaic expressions of friendship, Mr Clinton's assessment of Japan's economic performance was outlined in decidedly lukewarm terms, reflecting American impatience with the government's efforts to rescue its shrinking economy. In a joint press conference with the Japanese Prime Minister, Keizo Obuchi, he said that Tokyo's efforts to reform its banks and promote consumer spending were "quite good" but added: "Whether it will work or not I don't know."

Mr Obuchi's government has been struggling since the summer to pull Japan out of the country's worst recession since the Second World War. Apart from prolonging the Asian financial crisis, the collapse of Japanese consumer spending is beginning to effect Western economies, which are finding it more difficult to sell their products in Japan.

As Mr Clinton landed in Tokyo on Thursday, new figures revealed that Japan's trade surplus with the US had soared by almost a third compared with a year before. Officials in Tokyo insist this is because Japanese consumers are no longer spending as much, but Mr Clinton rejected this explanation. "We have had ... in one year, a 500 per cent increase in the imports of steel from Japan," he said. "No one seriously believes this is solely because of changing economic conditions."

The coolness of the meeting was a reflection of Japanese, and more generally Asian, exasperation at what is seen as American leaders' self- righteous preachiness in criticisms of Japan's efforts at economic reform. Japanese diplomats were still fuming yesterday over criticisms by Mr Clinton's trade representative, Charlene Barshefsky, of Japan rejecting a proposed Asia- Pacific free trade agreement.