Prime Minister Keizo Obuchi arrives in Washington today for
the first official visit by a Japanese prime minister in 12 years. Other official visits
have been planned but none of Japan's many prime ministers over the last decade has lasted
in office long enough to make the trip.
Obuchi, memorialized in the U.S. press as
"more boring than cold pizza," has demonstrated considerable talent for
stabilizing, at least in the near term, Japan's tumultuous political and economic
situation. Japan's banks have stopped hemorrhaging, the Nikkei stock index is up 25
percent this year, and the Obuchi government -- which most pundits had predicted would
fall by last September -- is still very much in control. Obuchi's goal in Washington is to
get President Clinton to proclaim that Obuchi's team has done a great job.
In Washington, however, episodic attention to
U.S.-Japan issues generally occurs in the absence of strategy. When Japan is on the
administration's policy docket, the approach is too predictably an ad hoc response to a
coming summit, as in the current case. Alternatively, consideration of Japan policy at the
highest levels usually comes as a concession to a narrow commercial interest group, like
the steel industry, which has commandeered Congress to kick the White House forward on
some trade dispute. This isn't to say that America's trade agenda is not important; it's
just not treated as such by most of the Clinton team.
Japan last had a strong presence in the nation's
headlines last August when the Dow Jones Industrial Average was convulsing up and down
hundreds of points each day. The markets were fearful that Japan's banking system might
melt down and that Japan's failure to grow as an economy could produce a devastating
global economic shock, following the severe dislocations that had already taken place in
Southeast Asia. Americans cared then about Japan because what happened in Tokyo was
perceived to have consequence on how much money Americans made or lost in the markets.
Today, the Dow Jones average is zooming past even Goldman Sachs' Abby Joseph Cohen's
once-seemingly-outlandish prediction of 10,000 points. Most Americans, at least for the
time being, give scant attention to Japan.
The casual treatment which the United States
extends to the world's second largest national economy is made obvious in an interesting
bench mark. In his State of the Union address two years ago, Clinton failed to give Japan
even a single reference during 90 minutes of remarks. Tokyo was devastated. Japan received
one reference last year and this year was upgraded to two minor utterances.
U.S.-Japan policy paralysis is the norm in
Washington. With trade tensions still simmering, U.S.-Japan mutual defense guideline
legislation now in play, and Obuchi's visit to America reality, the sound and fury of
U.S.-Japan relations may hit a high pitch, but only for a moment.
A reference by Clinton in his State of the Union
address to Japan's surge in steel exports and another to maintaining our defensive
alliance with Japan mean that Defense vs. Trade is back.
The policy team assembled in the Clinton White
House has never been able to walk a straight line in U.S.-Japan affairs, and, while
promising a post-Cold War reordering of America's economic and security priorities,
Clinton's advisers have allowed inertia to be the primary driver of the U.S.-Japan
The current drama over Japan policy is best
represented by the interests of the Pentagon, on one hand, and the Office of the U.S.
Trade Representative on the other. Over the past two years, the Defense Department has
worked hard to push Japan to partner with the United States on a research program for, and
eventual deployment of, a theater missile defense system (TMD), as well as the adoption of
new U.S.-Japan Joint Defense Guidelines, last modified in 1978. Both the guidelines
legislation -- which clarifies Japan's role in rear-area support of U.S. forces engaged in
regional conflict -- and TMD research have become highly controversial policy issues
Nonetheless, in the wake of recent rocket launch
tests by North Korea and questions about stability in Northeast Asia, as well Asia's
continuing financial crisis, the Pentagon's top priority in Asia has been to secure
Japanese passage of legislation upgrading support of U.S. forces engaged in conflict.
Obuchi has just secured passage in the lower house of Japan's National Diet, and while he
still must get the legislation approved in the upper house, Obuchi is presenting this
legislative success to President Clinton as an omiyage, or present, during his
On the other hand, USTR is also back in the news,
having reinstituted Super 301 and Title VII trade authority by Executive Order of the
President. Super 301 authority, which expired in 1997, allows USTR to specify unfair
trading practices confronting American exports and to generate corrective actions,
including economic sanctions, to redress other nations' unfair trading behaviors. Title
VII authority, which previously expired in 1996, allows USTR to confront discriminatory
foreign "government" practices.
Last fall, while the world was reeling from
capital panic attacks, convulsing equities markets, and plummeting currency values,
particularly in Southeast Asia, the macroeconomic team in the White House, led primarily
by Treasury Secretary Robert Rubin and his deputy, Lawrence Summers, prevented the pursuit
of USTR's microeconomic or sectoral trade agenda. In addition, the president's former
Chief of Staff, Erskine Bowles, an investment banker by trade, tended to give the tilt of
influence to the Treasury Department's concerns during the economic crisis over any other
concerns expressed in the Cabinet.
However, at the end of October 1998, Bowles
stepped down, and John Podesta -- a former Senate Agriculture Committee staffer who
understands well the give-and-take required to maintain relations with congressional
members and who is much more comfortable with a sectoral/microeconomic agenda -- became
White House Chief of Staff. Podesta knew that the White House must tread carefully with
members of Congress during Clinton's impeachment trial, particularly with Democratic
Senators Robert Byrd and Jay Rockefeller, both of West Virginia, a major steel-producing
Although there is no explicit linkage between the
president's statements about Japan's steel exports and his Senate trial, none should miss
the nuance of Byrd having offered the motion to dismiss the president's case from the
Senate. Rockefeller, as well, has been a critically important, long-time ally of the
president, playing an important role on the Senate Finance Committee, which has
jurisdiction over trade issues. Their demands that the White House take action to stem
Japanese steel dumping in America markets could not go ignored and finally compelled the
resurrection of Super 301 trade authority.
Because many perceive that Japan's high levels of
exports into U.S. markets crowd out other Asian nations' exports, vital to those nations'
ability to restore economic growth, Japan is often perceived as being part of Southeast
Asia's economic problems, rather than contributing to their solution.
Japan should be helpful during these economically
tense times, finding ways to generate growth internally, rather than through exports, and
should become an engine of consumption for other Asian nations. However, the lack of
confidence by consumers and workers in their own economic system is blocking recovery.
Japanese are so worried about their futures that they are saving at increasingly higher
rates, when what needs to happen is for this pent-up savings to be released into the
economy. Since consumers won't stimulate growth in the near term, the only option is for
the Japanese government to continue to pump trillions of yen into projects. Clinton's team
will probably encourage Obuchi to keep pumping the cash into the system, just so the
embryonic signs of an economic uptick don't quickly collapse.
Resurrecting Super 301 initiated a date-driven
process that runs counter to the praise-only summit that the Japanese government wanted.
The original executive order specified a deadline of March 31 for listing offensive trade
practices and April 30 for reporting to Congress. In other words, the White House approved
a process that would require USTR to specify its trade remedies with Japan one working day
before President Clinton's meeting with Prime Minister Obuchi.
Over the last several months, there has been
little doubt that Japanese steel exports have been one of the targets of USTR and the
Commerce Department, but other sectoral frustrations over pharmaceuticals,
telecommunications, flat glass, insurance, and government procurement have been prime
candidates for Super 301 attention. Still, the White House has had in hand absolutely no
"Japan plan" and, consequently, has been driven by ad hoc decision making,
responding to pressures as they have surfaced.
Super 301 resurfaced mostly because the president
had an impeachment trial in process and the White House could not afford to alienate its
friends in the Senate. With the president's trial over, the White House's need for each
single senator has diminished.
Vexing foreign affairs issues have begun to
multiply, and Japan's prime minister is arriving in the wake of the visit of Chinese
Premier Zhu Rongji. North Korea continues to complicate the security calculus in the Asia
Pacific -- most recently by incursion of two gunships into Japanese waters which 21
combined Japanese maritime safety and defense ships and aircraft failed to stop. No one
really knows what will unfold in the next several months over North Korea policy, but
tension levels seem certain to rise, not only in Washington, but also in Tokyo, Seoul and
Beijing. National Security Adviser Sandy Berger and Defense Secretary Cohen will
underscore the importance of low levels of tension with Japan, in order to have some
assistance in containing the North Korea problem and to maintain some leverage over China
-- whose premier feels badly treated after failing to secure a World Trade Organization
deal in Washington and who was continually confronted with questions about Chinese
espionage efforts in the United States.
Japan has been ridiculed for decades for not
having a more developed sense of its national interests and for not pursuing its own
foreign policy. Nothing could be farther from the truth. Japan knows that America wants to
keep its air and marine bases on Okinawa as well as other military installations on
Japan's main islands. Tokyo uses its leverage on U.S. security interests brilliantly to
keep America from going too far in its economic demands.
Meanwhile, the Defense Department has vigorously
clung to its Cold War assets in Asia and has done a good job of warning top White House
decision makers that West Virginia steel workers are a small price to pay in exchange for
the defense assets Japan provides. Although all of the news is not in, this week's summit
is likely to produce no 301 trade action, applause for Japan's steps forward on security
cooperation, and encouragement to do more in deregulating and stimulating its economy. A
joint report will likely be issued -- and progress on nearly all of the bilateral sectoral
trade dispute will be proclaimed, even though very little of substance has been achieved
on most fronts.
By playing the security card, both Japan and the
Department of Defense always seem to be able to beat back USTR's trade team. Until America
decides that its economic interests have primacy, and until it is resolved to abandon a
defense architecture designed for the Cold War and let Japan develop an independent
security posture, American trade policy will only generate minor fits of thunder. Real
accomplishments will be few.
Copyright 1999, San Diego Union Tribune