IP: Ed Lincoln/ Jerry Johnson talk on Japan and the US

[Dave Farber <farber () cis upenn edu>]

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/


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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.