US-Japan Economic Framework Splinters Poor Results in Talks May Force US to Rethink Approach

Article excerpt

NEXT Tuesday, on his second trip abroad as president, President Clinton will arrive in Tokyo without having clinched a broad agreement from Japan to boost imports from the United States and thereby create hundreds of thousands of new American jobs.

Mr. Clinton and Japanese Prime Minister Kiichi Miyazawa had committed themselves at an April summit in Washington to reach an agreement by July 7 on a "framework" for negotiating their two nations' economic differences.

But Clinton trade officials left Tokyo this week in frustration after two days of talks in which Japan rejected a US proposal to cut its current-account surplus nearly in half by bringing in more imports through increased domestic demand and by opening markets.

Officials in Tokyo also gave a stern "no" to a US proposal to set "benchmarks" for measuring compliance in any trade agreement. Japan fears that failure to meet such targets would bring retaliation from the US.

"You Americans are results-oriented. We Japanese are intention-oriented," says Masaya Miyoshi, director-general of the Japan Federation of Economic Organizations.

Japanese leaders also bristle at any agreement that would force them to arm-twist companies into opening up markets to foreigners. "Is it reasonable for any government to ask its people to buy what they don't want?" asks Noboru Hatakeyama, a retiring trade official.

The Clinton administration adopted a results-oriented strategy in its approach with Japan, in contrast to what it calls a "process-oriented" approach of President Bush. "The ultimate test of any trade agreement is the changes it brings. It's difficult to see any other way to monitor progress than by looking at benchmarks," says Lawrence Summers, US undersecretary of the treasury for international affairs. Rethinking strategy

But the lack of substantial results in talks with Japan so far could force the US to rethink its strategy. Any change is unlikely before Clinton arrives in Japan for the July 7-9 summit of the Group of Seven leading industrial nations. He is to meet with Mr. Miyazawa on July 6.

A number of world leaders and think tanks, some at Japan's urging, have criticized the new US approach.

A study released this week by the Carnegie Endowment for International Peace suggests the US make its pitch directly to the Japanese public, who "more than politicians or the bureaucracy, may be the major force in setting the pace of Japan's market openings."

But Clinton officials appear impatient to create American jobs by the end of his four-year term. …