Analysts Discuss Shortcomings Of Japan-U.S. Trade Relations

Japanese and American government officials sharply differed last night at a Kennedy School Forum in their explanations of the two countries' multi-billion dollar trade deficit.

Rep. Toby Roth(R-Wis) told a crowd of 150 that the U.S. must demand "fair play" from Japan in stabilizing the two nation's trade relations.

Saying the trade deficit will reach $20 billion this year, Roth called U.S.-Japanese economic interaction "a two-way street." He added that "we are friends with Japan, but they have to be friendly with us."

Naohira Amaya, former Japanese Vice Minister for International Affairs, said at the forum that the "closed nature" of his country's market and an undervalued yen had strengthened its trade position in relation to the U.S. and added that American industry has failed to keep pace with Japanese productivity.

The U.S. refusal to sell Alaskan oil to his country and the Allies post-World War II limit on Japan's defense spending have also added to the trade deficit, Amaya said. Japan's defense budget is limited to less than two percent of its gross national product.

Stressing "enlightened cooperation" between Japan and the U.S., Amaya called for a restructuring of industry, primarily in the U.S., and joint research by private companies in high technology. Roth made no specific suggestions on improving the American trade deficit.

Describing a "sea-change in the system of trade relations around the world." Raymond Vernon, Johnson Professor of International Business Management emeritus, said that Japan and the U.S. are each other's best economic allies.

The two countries "may walk to the brink and walk back again," Vernon said, "but we are stuck with each other and we'd better make the best of it."