Orphan or Partner?

THE ALREADY STRAINED RELATIONSHIP between Japan and the United States is becoming even more delicate. The attitude of the Nixon administration toward Japan in recent years has been characterized by tough tactics, striking swiftly to force Japanese acquiescence. President Nixon used these tactics in his "New Economic Policy" of August 1971 which compelled Japan to revalue the Yen, in his announcement of the China trip as well as his forcible settlement on the textile issue.

Since World War II, the United States attitude toward Japan has changed from sympathy to admiration to precaution and finally to retaliation. When President Nixon introduced the "New Economic Policy," a member of his brain trust, Pierre A. Rinfret, appraised the policy enthusiastically:

"The real target of our international trade and monetary moves was Japan--not the Europeans. U.S. patience has worn thin with the one-sided, lopsided, inequitable, unfair economic and monetary treatment we have received from the Japanese. The day of bowing and scraping to them is over. From now on the Japanese will have to give more than they get or suffer more counterattacks." (New York Times. Aug. 30, 1971)

Soon afterward many Americans expressed their delight that the Nixon administration had won its "economic war" with Japan by compelling voluntary restrictions on textile exports to the United States. Despite the Nixon "victory," U.S.-Japanese economic relations have continued to deteriorate. In the eyes of many Americans, the large U.S. trade deficit with Japan has been the cause of worsening economic relations between the two countries. I think that such a view is too superficial. The actual situation is that the U.S. has failed to correct economic imbalances, such as the wage-price spiral, which have been spurred on by the Vietnam war and have led to its worsening balance of payments position. In addition, the "world famous" vigor of the U.S.-owned multinational corporations has played an important role in restricting export and employment opportunities in the continental United States. For example, if Japan's annual importation of more than $3 billion worth of goods from overseas U.S. subsidiaries is added to her imports directly from the United States, then the trade relationship between the two countries becomes roughly speaking balanced.

Since Japan's trade deficit with the United States was a primary factor in her persistent balance of payments difficulties prior to 1964, Japan frequently requested that the U.S. take necessary measures to correct the imbalance. The U.S. always replied that the imbalance could only be considered from a unilateral and not a bilateral viewpoint. Who would think that that could have been the attitude of a country which is now trying to force another nation to immediately rectify their trade problem on a bilateral basis?

Many American officials and businessmen allege that if Japan ceased to maintain its so-called network of tariff and non-tariff barriers against U.S.

Many American officials and businessmen allege that if Japan ceased to maintain its so-called "network of tariff and non-tariff barriers against U.S. goods," all trade problems between the two countries would be resolved. Such an opinion is obviously at odds with the facts. According to data from the General Agreement on Tariffs and Trade, Japan has a lower tariff level (11 per cent) than does the United States (10.9 per cent).

One should also note that Japan is exercising so-called "voluntary restraint" on 23 per cent of the items she exports to the United States.

On the other hand, most Japanese must get over the idea that the United States continues to be as wealthy and generous as it was during the early postwar years when it provided Japan with economic aid. Japan is now a prosperous country, and her economy has grown to such a point that she can afford to discard her self-serving economic policy for one which will benefit both herself and the rest of the world.

Particularly in regard to Japan's ties with the United States, the inability of the two countries to recognize and then to make adjustments for the fact that they have different cultures, languages, ways of thinking, social structures and histories have served to aggravate the problem of adapting to their changing economic relationship.

The need for mutual understanding will become even more critical because of the bleak outlook for U.S.-Japan trade relations. Most of Japan's present imports from the United States are raw materials and foodstuffs. Once the China market develops, Japan may find it more profitable to substitute imports of primary goods from China for those from the United States. Japan and the U.S. will also be rivals in selling manufactured goods to the Chinese. Therefore, conditions in the China market will further complicate the U.S.-Japan trade relationship.

During the past 100 years, Japan has been a major center of unrest in East Asia. In particular, following the depression of 1919 when the world saw the emergence of blocs, Japan was swept by a strong feeling of uneasiness, frustration and estrangement from the rest of the world. Recently there appears to have been a revival of something like the old sense of isolation, because the United States has led the other Western powers in "ganging up" on Japan--forcing it to float the Yen.

We do not want to be an "orphan of the world" again. We should never repeat the mistakes of the past generation. Mutual understanding is now more important than anything else for the maintenance and promotion of healthy U.S.-Japan economic relations and for the economic prosperity of the world.

Ichiryu Yoshio is a student in the MPA program at the John F. Kennedy School of Government.