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Bargaining with Japan: What American Pressure Can and Cannot Do.

By Leonard J. Schoppa. New York: Columbia University Press, 1997. 406p. $49.50 cloth, $17.50 paper.

Michael F. Thies, University of California, Los Angeles

Leonard Schoppa's new book represents an important advance in the study of international trade negotiations, and a giant leap forward for the study of U.S.-Japan trade relations. Schoppa adapts the popular "two-level game" approach to explain variation in the effectiveness of U.S. pressure on Japanese policymaking. It is that variation, he argues, that exposes realist theories as insufficient for explaining international bargaining outcomes. By choosing five U.S.-Japanese disputes that were dealt with simultaneously under the rubric of the 1989 Structural Impediments Initiative (SII) talks, Schoppa is able to hold constant the relative power of the two countries. If the United States was able to win Japanese concessions on distribution policy by virtue of its geopolitical advantages, why was it so ineffective in its efforts to break up the keiretsu business arrangements? Realist theory cannot answer this question, so Schoppa turns to the more nuanced approach that he calls "negotiation-analytic."

Here the key is that not all issues are processed equally in decision making by either demander or target countries. Different issues involve different combinations of government agencies and different constellations of socioeconomic interests. The participants at the international bargaining table might remain the same, but the number, identity, and relative strengths of participants at the domestic bargaining table vary according to the topic at hand. And it is the outcome at the latter table that determines the outcome at the former.

Schoppa's best insight, however, is not simply that diplomats must bargain in the shadow of issue-specific domestic bargaining coalitions. His most intriguing argument is that the government negotiators from one country can and do take advantage of those variations in the other country, in two ways. First, they can set the negotiating agenda by picking issues for which the target country's domestic coalition for policy change is (or could be) strong. If there are already target-country actors with clout whose interests coincide with those of the demander country, all the better. Second, the demander country might also try to restructure the debate at the target country's domestic bargaining table, through the techniques of "participation expansion," "synergistic linkage," "reverberation," or "alternative specification." Schoppa gives examples of each technique, but I will comment only on the first two, since they are the most relevant to the case of U.S.-Japan relations.

Participation expansion refers to the efforts by the demander country to locate latent allies within the target country, and to find a way to get them entree into domestic decision making. These allies need not necessarily support the foreign claims per se but must at least have interests that coincide with those of the demander country, usually for some policy change that benefits both. Schoppa seems to suggest that the mere inclusion on the bargaining agenda of issues with participation-expansion potential will suffice to get the latent allies a seat at the table, but this link could probably have been spelled out more explicitly. Given that these latent allies were previously excluded, why should the advent of foreign pressure be enough to get them included?

Synergistic linkage refers to the demander country's tactic to threaten (credibly) the interests of a powerful target country constituency if its demands are not met. For example, the United States might threaten to punish Japanese big business interests in order to get the Japanese government to open up agricultural markets. This makes big Japanese manufacturing firms care about farm policy, and if the threat is credible, it might induce them to pressure the Japanese government to concede to U.S. demands on farm imports. Of course, the more powerful is the threatened group in the target country, and the weaker are those in the demander country who might bear some costs were the threat to be carried out, the more likely this tactic is to work.

To cut to the punchline, Schoppa concludes that U.S. pressure was successful only if it resonated within the Japanese decision-making community. Thus, the United States induced changes in distribution policy (most notably the weakening of the infamous "large-scale retail store law") and in public investment policy (especially public works spending on sewers) because domestic Japanese coalitions for policy change existed or were created to push the Japanese government toward concessions. By contrast, U.S. demands in the areas of competition policies (keiretsu cross-shareholdings and exclusionary business practices) and land policy failed, because Japanese coalitions for policy change could neither be found nor constructed.

In addition to this nicely nuanced theoretical extension of the two-level game to recognize the importance of cross-issue variation in domestic decision-making environments, as well as the variable ability of demander countries to take advantage of - or even alter - those environments, Bargaining with Japan is valuable for its thorough rendering of several cases of U.S.-Japan bargaining. In addition to the several aspects of the SII negotiations, Schoppa discusses the Framework talks carried out ten years later, during the first Clinton administration as well. All the cases are laid out in careful detail, and all seem to confirm Schoppa's theoretical contentions. For these reasons, this is a terrific book, for the Japan scholar, or the international trade theorist.

Of course, any book that is this ambitious on both the theoretical and empirical fronts must inevitably cut a corner here or there, so a few points remain to be addressed. First, the book aims to be more than a theory of U.S-Japan relations, but its focus on bargaining between those two countries leaves open the question of how general its conclusions really are. The theory is general enough to apply to any international negotiation (at least of the bilateral type), but it is unclear whether it is robust to changes in the relative bargaining power of the two players. This throws us right back into the realm of realist theory. In the cases examined, the demander country was always the United States, and the target country always Japan. Might it be the case that the relative geopolitical dominance of the United States was a necessary condition for extracting concessions, even if we grant Schoppa the point that it could not have been a sufficient one? To be fair, Schoppa hints that this might indeed be the case, when he writes of the U.S. failure in the 1990s Framework talks that, with the end of the Cold War, Japan "is becoming more of a 'normal' country . . . less and less responsive to U.S. pressure" (p. 306). But does this mean that participation expansion and the other tactics that the book lays out are useful only in "abnormal cases" where one country is subordinate to the other geopolitically?

Next, there is the always dicey problem of counterfactuals. Schoppa recognizes that to show that foreign pressure was effective requires that one show that the eventual outcome would not have happened in the absence of that pressure. Because history cannot be run twice, this is impossible to prove, so argument must take the place of evidence. Fair enough. But in this case, the problem might be even trickier than this book acknowledges. Schoppa defines U.S. pressure as being "effective" when the outcome comes "close to what the Americans had originally demanded" (p. 20, italics in original). Pressure is ineffective, he claims, "when the deal leaves Japanese policy little changed from what would have happened without foreign pressure" (Ibid.). Two points must be made. First, these two conditions are not mutually exclusive (i.e., the United States might have demanded and "received" something that would have happened anyway), and so do not separate effective from ineffective cases cleanly. Second, U.S. demands might be endogenous - for domestic political reasons of its own, the U.S. government might avoid asking for the impossible, at least some of the time, and instead focus on asking for the easily attainable. Thus, pressure might appear effective when it was not even necessary, and the only way we can know the difference is to talk our way through the untestable counterfactual. Again, to be fair, Schoppa certainly understands the second of these problems, and does an impressive job of showing the reader just why and how U.S. pressure was indeed important.

A third direction in which Schoppa's analysis could be extended would be to flesh out the politics within the demander country a little better. For example, might it be important that the Republicans took over Congress in January 19957 This might have made U.S. threats to retaliate against Japan less credible, as the new congressional majority was known to be less protectionist than its Democratic predecessors. The point made above concerning how domestic politics in the demander country affect the details of the demands (e.g., when to demand a small sure thing, and when to demand an unlikely blockbuster) falls into this category of as-yet-underdetermined, but certainly approachable, by the Schoppa model.

Finally, for all the effective effort that this book devotes to clearing away the vagaries of realism and the overgeneralizations of revisionism, it occasionally wanders into its own thorny patches, as when it invokes such undefinables as the perceived "legitimacy" of foreign demands. Schoppa asserts that latent target-country allies are more likely to become active when they perceive the demands as being "legitimate." It is not clear whether this insight adds anything to our understanding. If legitimacy is a function of who is making the demand, then it sounds like a contextual variable of the realist type (i.e., relatively constant over short periods of time, and across issues). If, however, legitimacy is a function of the substance of the demand, then it seems it could be captured by the same sort of analysis as are the rest of the substantive issues in this book: who wins and who loses, and how much clout does each group have? In either case, it is a Pandora's box.

As I suggested, however, these criticisms are mostly suggestions for extensions of Schoppa's work. This is the most theoretically sophisticated treatment of U.S.-Japan trade relations that I have encountered, and for that reason, the most satisfying, convincing, and promising. Moreover, in the study of international bargaining, Schoppa has broken some theoretical ground here that is new, and easily generalizable to other cases.
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Title Annotation:Review
Author:Thiers, Michael F.
Publication:American Political Science Review
Article Type:Book Review
Date:Mar 1, 1999
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