Newspaper article The Christian Science Monitor

Japan, in Political Limbo at Home, Faces Criticism over Trade at G-7

Newspaper article The Christian Science Monitor

Japan, in Political Limbo at Home, Faces Criticism over Trade at G-7

Article excerpt

AMID current political turmoil, Japan is bracing for criticism at the summit of the top seven industrialized nations in Tokyo next month.

Clinton officials have blamed Japan for slowing down world economic growth with its record-high trade surplus. France has accused it of being the lead violator of international trade rules. Such finger-pointing is unusual just before the yearly summit of G-7 nations, which includes Britain, Canada, France, Germany, Italy, Japan, and the United States.

Criticism may be kept to a minimum since Prime Minister Kiichi Miyazawa became a lame-duck leader last Friday. The ruling Liberal Democratic Party lost a no-confidence vote in the lower house, ending its 38-year majority rule. About 15 percent of the LDP members defected, and an election is set for July 18.

The political limbo has pushed down the value of the yen by about 4 percent, and the Tokyo Stock Exchange's Nikkei Index by about 3 percent. But by the time of the summit, the yen may have resumed its climb in value that began earlier this year under US pressure to reduce the bilateral trade imbalance.

"The adverse effect on the Japanese economy of political uncertainties should be minimal," says Salomon Brothers' economist Robert Feldman in Tokyo. The economy, after a two-year recession, grew an annualized 2.3 percent in the first quarter, he notes.

"It is vitally important that Japan exert leadership to ensure that the Tokyo summit does not generate into another shouting match," stated an editorial in the Japanese business daily, Nikkei. But persistently high unemployment in Europe and the US has begun to wear down the cohesion of the G-7. Among the world's top 24 industrialized nations, average real growth in 1993 will likely be a mere 1.3 percent, estimates the Paris-based Organization for Economic Cooperation and Development. Such domestic pressures make it harder for the G-7 nations to harmonize economic policies and tackle global problems, such as aid to Russia.

Japan, which has relatively low joblessness despite its current recession, is seen by US leaders as peculiar in its economic approach. …

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