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IP: Ed Lincoln/ Jerry Johnson talk on Japan and the US
From: Dave Farber <farber () cis upenn edu>
Date: Mon, 28 Oct 1996 13:03:15 -0500
As sent by mjensen () nmjc org (Michael Jensen) Tuesday, 22 October, our Center and the Japan Information Access Project (JIAP) sponsored a talk in Washington DC. The topic was what impact the Japanese and US election results might have on US-Japan negotiations -- can the winner be tougher? The speakers were: -- Ed Lincoln, former Special Economic Advisor at the Embassy in Tokyo and currently Senior Fellow in the Foreign Policy Studies Program at the Brookings Institute; -- Jerry Johnson, Vice President and Director, International Trade and Policy Group, at the firm of Powell Tate (the company represents Japanese clients in the US and US clients with Japan business); -- David Sanger (moderator), from the NY Times. The talk was broadcast live by CSPAN, then re-broadcast yesterday. I believe that a couple of the Japanese papers covered it, since I've heard that Asahi, at least, had a cover story the other day to the effect that the former advisor to Mondale said there would be no reform in Japan (or something like that -- I haven't seen stories from the J press in the last couple of days). Regards, Michael Jensen New Mexico US-Japan Center Japan Information Access Project access () nmjc org http://www.nmjc.org/jiap/ ------------------------------------------------------------------------ JERRY JOHNSON There has been a change in US-Japan relations from the '80s to the '90s. One reason is because there has been a change in the relative economic situation of the two countries -- the US is in better shape and Japan is in worse. Most of the global/macro differences between the two have been dealt with; now it is sectoral issues similar to those the US wants to resolve with other countries (even if there are _lots_ of them with Japan). There are also increased, and increasingly closer, ties between US and Japanese firms. The US realizes it has other trading partners with whom it has a deficit and that there are other problems in the world (Mexico, Irag, Cuba). Finally, the US-Japan security relationship has come to the fore again. Japan, for its part, doesn't say "No" as aggressively as it could because it recognizes its real economic interests. Thus, Japan came to agreements with the US over autos and semiconductors, for example. There are some issues out there: the way the Kodak-Fuji case is settled in the WTO could affect the resolution of other US-Japan disputes; aviation; insurance (as a prelude to dealing with financial services more generally); access to SE Asian trade; digital video. As for the impact of the elections, on the US side, policy towards Japan is driven by a lot of actors -- President, Congress, labor, etc. -- but in general, there is a pattern on both sides of Spring after an election being the time for the exchange of accusations over trade, so expect to see something next year as well. ED LINCOLN Started off by saying that the fact he was back in Washington DC after 2 1/2 years meant that all the problems had been solved (laughter). While he agreed in general with what Jerry Johnson had said (even was surprised by how mild it was), he thought that relations between the US and Japan were more awkward and difficult than JJ had put forth. Japan is suffering from "the collapse of the revolution that never took place". That is, the LDP was never thrown out; former LDPers just got re-elected under a different party name. Ozawa himself is definitely _not_ a reformer. Historically, the bureuacracy evolved a close relationship with the LDP. In the transitional period of '93-'94, Hosakawa and Hata had problems because the ministries didn't know how to deal with them; didn't know how close they should get to the two because the LDP could come back to power -- and then what. Hashimoto is relatively strong as PM and this lessens the ambiguity, especially with a stronger LDP, when the negotiations start. The LDP is _not_ interested in market opening, reform, etc. The bureaucracy dominates still. Japan is, once again, operating in a "fear" mode -- the US is in front. However, this is more comfortable because they know how to respond. For one thing, there will be another round of industrial inititatives, which will inevitably lead to new battles with the US. The Japanese public is not motivated to speak up; they seem relatively satisfied with the political system. As for the impact of the elections... things won't be tougher. Japan will still be difficult to deal with and the US will still muddle through. Have to realize that in the US, "Japan" is not a partisan issue (although maybe there would be more emphasis on strategic/security issues under a Republican administration). US exports _have_ gone up rapidly in the last few years despite the weak Japanese economy. It is, in part, exchange rate-related but this also means that the market mechanism is better now and allows a response to signals like exchange rates. A couple of the substantial issues on the horizon: -- industry access problems (though not on the level of autos); -- the question of whether Japan has been probing the boundaries of how far it can push the US before the US actually retaliates with something like 301. If Japan pushes again (probably will) the US _will_ retaliate if Japan doesn't negotiate. DAVID SANGER Back in '93, the US saw Hosakawa and Hata as the best chances for reform in Japan, but quickly realized this wasn't true. Then Hashimoto came in and the US said: "here is someone we can negotiate with". Reiterated EL's view that there will be murkier times ahead. The US economy will slow and the Japanese economy will pick up and this will bring the old tensions to the surface again. There will be a battle over access to SEAsian trade. The security alliance will also be a problem -- look at the slow Japanese response over China; look at the likely scenario if North Korea collapses. QUESTION & ANSWER Q: (TV Asahi reporter) -- There was a change from the first to the second Reagan administration. Is this likely to be the case with the Clinton administration? A: EL -- Yes. The second Reagan administration saw the Moss talks, for example, which signalled a different approach to dealing with japan than in the first administration. Q: (Pacifica Corporation/ Seth Sulkin) -- The sectoral approach to trade issues creates problems for negotiating because it is open to the charge that it is arbitrary, ad hoc, and a response to political pressure (from a big donor for example) more than to economic concerns. A: JJ -- Yes, some cases are "political" rather than economic. EL -- Actually, the Clinton administration did sit down and put together a list that was a step removed from the usual "political" list of issues. This list went into the Framework talks. Have to note that the government can't get too far ahead of industry when bringing trade disputes; it has to wait for industry to lay out a case first. JJ -- Also have to note that Japan has a better case to make these days than it used to. Q: (Robert Deutsch) -- The general public seems to have an entrenched negative attitude towards Japan. You (EL) said the US will continue to muddle through, which means...? Will the US ever have to do more than muddle through, like work to create a better relationship? A: EL -- No. Companies _do_ make money in each country. Yes, there are arguments, but almost always one side or the other blinks and there is a resolution. Q: (can't remember his name; works for Kyodo News?) -- Hashimoto seems to have successfully hidden trade issues with "security". A: EL -- this is not quite true; the event that triggered the dominance of security talk was the Okinawa rape, but the process itself (to discuss the security arrangement) had started earlier in the year. Trade and security issues should be separated as they have been the last 50 years, since the two areas have their own cycles and dynamics. JJ -- ditto. EL (in response to a follow-up: shouldn't the US have an overall policy towards Japan?) -- The US does have a policy, namely that Japan is an important ally, etc., etc., but the US public needs to feel good about the relationship so it will support the relationship.
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- IP: Ed Lincoln/ Jerry Johnson talk on Japan and the US Dave Farber (Oct 28)