Trade Warrior

Article excerpt

WARNINGS, THREATS, HEAD-lines, concessions: that monotonous pattern has marked a decade of nonstop trade disputes between the United States and Japan. Last week the familiar diplomatic tango degenerated into a dancehall brawl--with U.S. Trade Representative Mickey Kantor in the middle. First he all but shut off imports of Japanese luxury cars. Then he took on the European Union, which rushed to protest the U.S. sanctions. "Our European friends are always willing to hold our coats while we get our nose bloodied," he gibed. But while Kantor's high-stakes move conveyed a message to Tokyo, it sent an even stronger signal back home. When it comes to trade policy, at least, Bill Clinton can back up his tough talk with action.

Give the credit to Kantor, the president's much-maligned trade czar. After two years as chief U.S. trade negotiator, Clinton's former campaign manager has finally hit his stride. The overblown rhetoric of his early months, when Kantor's constant attacks on alleged foreign unfairness won him a reputation for empty threats, has calmed. Kantor has managed to reposition himself as a decisive strategist, not just a big talker. In February he signed an unprecedented pact with China to counter illegal copying of U.S. movies, music and software. Now he has taken an unusually hard--and potentially risky--line with Japan. "His ideas really haven't changed since he got there," says a top aide. "He's just grown more comfortable dealing with trade."

As far as actual imports and exports go, that may not make much difference. But Kantor's offensive leaves Clinton in precisely the right position, visibly committed to economic openness--he has stood up for free trade with Mexico and for last year's global-trade pact--while at the same time standing ready to man the barricades against foreign unfairness. Sanctioning Japan, says Washington pollster Mark Mellman, "helps fill out the image of a president who stands up for what he believes in."

Kantor, a Los Angeles lawyer, was a novice when he became trade representative in 1993. The post itself was a consolation prize; he had wanted to be White House chief of staff, but was blocked by Clinton aides who felt Kantor had slighted them during the campaign. Knowing little of the niceties of trade policy, Kantor was convinced that a tougher, more "realistic" approach to negotiations would fix problems his predecessors couldn't solve. It didn't. His seeming insistence on winning every bargaining point antagonized trading partners, and bad political calls turned the U.S.-Mexico-Canada free-trade pact from a sure thing into a near casualty. Two years of experience may not have mellowed Kantor, but they have shown him the limits of trade policy--and how to wield it to best effect.

The auto sanctions offer a taste of the new Kantor style. Cars and car parts account for most of the huge U.S. trade deficit with Japan. Years of bargaining have slowly pushed back Japan's barriers to foreign cars. But although Detroit's Big Three now have showrooms in Japan and companies like Nissan and Toyota are buying more American-made parts, the U.S. share of Japan's market has remained tiny. That's not a front-burner issue for the U.S. industry, which has bigger fish to fry in emerging markets like China and Indonesia. But Kantor sensed that Japan is uniquely vulnerable on the car front: at 87 yen to the dollar, it's hard for Tokyo to argue that American mufflers aren't dirt-cheap. Washington wants not only looser regulations but also a commitment to more imports. The Japanese offered to ease up on the inspections of imported cars, but rejected import targets. Kantor threatened sanctions--only this time he acted. After weighing such unorthodox options as a tit-for-tat inspection of every incoming Japanese car, Kantor slapped 100 percent tariffs on 13 luxury models, shocking importers by making the higher tariffs effective right away.

Low cost: As usual, there's less to the sanctions than meets the eye. …