Like two sumo wrestlers, the United States and Japan are locked in another trade dispute. We can expect a lot of programmed grunting and grappling by these two world-class economic behemoths and much outrageous noise from the U.S. Congressional section of the bleachers. Senator Robert Packwood has emerged as the cheerleader, making threats of retaliatory sanctions. The Japanese make a good scapegoat, with racist undertones, for closed factories in Youngstown, Ohio, and Pittsburgh, and unemployed auto workers in Detroit, President REagan remains above the battle; he has an economic summit in Bonn next month, so his script calls for him piously to deplore protectionism. With Congress prepared to wield the big stick, he can aford to speak softly and let the anti-Japanese emotions run riot.
Bashing Japan Inc. won't solve the problems of the U.S. economy, however, or wipe out the growing U.S. trade deficit. Even if Prime Minister Yasuhiro Nakasone swept away all the customs barriers of his hermetic kingdom and persuaded his people to buy American, Japan could ingest only $2 billion to $3 billion in additional U.S. imports. Moreover, if we hit Japan, why not Canada, to whom we were $20 billion in the red last year? Japan is only part of the problem of too many American dollars chasing too many foreign goods; in the Far East, Singapore and Taiwan are rudely elbowing Japan for a share of the shrinking world market for consumer goods, and the debtor nations of Latin America are desperately seeking more foreign exchange to pay the vigorish demanded by multinational bankers. The United States is expected to sop up $400 billion worth of foreign goods and services this year, so a wave of Smoot-Hawley-style protectionism here could send the global economy spinning out of control. As a result of the foreign trade deficit and heavy overseas borrowing, the United States has become a net debtor nation for the first time since 1914. Welcome to Brazil, fellow North Americans.
The major cause of American Goods' inability to compete in Japan and elsewhere in the world is the overvalued dollar. The President, of course, seems to regard a strong dollar with the same reverence as a strong defense, but it's the latter that's a proximate cause of the former. Out-of-control defense spending coupled with lower taxes fueled the deficit at home, which in turn generated all those high-interest Treasury notes foreigners are buying.
The U.S. obsession with national security, now at its apogee, has bee a drag on this country's economic competitiveness for a long time. Here the contrast with Japan is instructive. Since its postwar miracle began, Tokyo has pursued a policy that places economic interests above the pursuit of illusory military security. The United States has done just the opposite, to the neglect of its economic base at home and to the detriment of its trade abroad.
Someday, perhaps, we'll get smart. Meanwhile, our sumo man will bump their and vice versa. The spectators should know, however, that the show is as finely choreographed as a Kabuki play, and just as relevant to the chronic ills besetting the United States and the world economices.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||U.S. trade dispute with Japan|
|Date:||Apr 20, 1985|
|Previous Article:||Maximum feasible revisionism.|
|Next Article:||Anti-Duarte tilt.|