Newspaper article The Christian Science Monitor

Toyota's Balance of Trade with US

Newspaper article The Christian Science Monitor

Toyota's Balance of Trade with US

Article excerpt

PRESIDENT Bush has left Japan with some agreements meant to open Japan's markets to United States products. No doubt the agreements will be widely condemned - in Japan as unnecessarily kowtowing to the US, and in the US when it turns out that the deals aren't improving our balance of trade with Japan.

Now is a good time to ask why this seems to happen over and over again. Many Americans believe that the answer is simple protectionism - that Japan's government is implementing a policy of protecting Japanese industry. However, the hallmark of Japan's government isn't its strength of purpose but its weakness.

Imagine how our federal government would work without a president to set an overall policy - a government in which Congress essentially ran the show, and its committee chairmen gave orders directly to the bureaucracy. That's about how Japan's government works - except that it outdoes even the US Congress in factional infighting, in the endless search for campaign contributions, and in the rigidity of it iron triangle of legislators, bureaucrats, and business interests.

It's no wonder we have trouble getting Japan's government to make and enforce trade agreements that its big companies don't like. That's about as easy as getting Congress to agree on a way to balance the US budget.

Nor is the problem some overarching conspiracy against American products. Sure, US companies with high-quality products have trouble breaking into Japan's markets, but so do many of Japan's own manufacturers. Honda won a big share of the US market just by making an excellent automobile. It did far less well at home, where the big established auto companies use dealer networks and other structural impediments to restrict all competitors, domestic and foreign.

To its credit, the Bush administration is negotiating to eliminate Japan's most obvious structural impediments to compe- tition. But even if these talks are successful (and recent progress has been glacial), they won't stop powerful Japanese companies from lobbying for new competitive restraints. The same is true here; even tax reform and the budget deficit haven't stopped Congress from handing out special tax breaks every year to influential constituents. Like ours, Japan's government will never stop doing favors for big companies.

So maybe we're negotiating with the wrong people. …

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