U.S. and Japan Should Soften Trade Rhetoric

As the decibel level of the trade dispute with Japan continues to increase, Japanese Prime Minister Yasuhiro Nakasone last week described as “extremely arrogant” suggestions by U.S. officials that his country should change its culture to help fight the trade deficit. It was an unnecessarily harsh remark and a gross exaggeration of what it is the U.S. leaders are calling for.

The word “culture” has broad meaning. Even in the context of “business culture,” the phrase used by Commerce Under Secretary Lionel H. Olmer before he resigned last month, it is too imprecise to be a wise choice of terms. But it seems reasonable to suggest that Japanese attitudes toward international business are contradictory, to the detriment of the nation’s trading partners.

Here is a country whose business leaders have been dedicated to internationalism in business for several decades, much to the benefit of the nation’s economy and its average citizen. Whole industries have been built and expanded with world markets in mind.

The irony of this modern view of things is that it has happened in a nation that has been insular in many respects through much of history and retains some of those attitudes today. It has far less diversity of cultures in its population. For the good of the nation’s balance of payments, the average citizen for a long time wasn’t even permitted to travel for pleasure outside the country. To some extent, the populace retains some suspicion of things foreign.

Time to Change

It is easy to hide behind this tradition and suggest that the United States, by talking about cultural change, is meddling. But by now it must be clear to most Japanese officials involved in the trade dispute that at this stage in Japan’s economic development, it is time for those attitudes to soften.

Even with an amalgam of cultures, the U.S. consumer wasn’t exactly international-minded much before the 1960s. Foreign products were suspect in many cases and the domestic economy operated substantially in isolation from the rest of the world. It took time for that resistance to imports to break down, for Japanese cars to gain the reputation for quality they generally deserve and for U.S. consumers to begin benefiting fully from the progress of world industry. But change came.

What is being asked of Japan is no more basic a change than that. What is needed is for Japanese leaders to help crack the door and let foreign goods begin to gain acceptance. Nakasone, himself, recognized this when he took his much-publicized shopping trip earlier this year to encourage each Japanese family to buy imported goods. To turn around and call U.S. encouragement of this effort arrogant is to undermine some of his own good works.

U.S. leaders are looking for two other changes: They want Japanese business to play by reasonable rules. Olmer was protesting pricing policies of Japanese semiconductor makers, suggesting they were willing to sell at uneconomically low prices to capture a market. The practice is called “predatory pricing.” Whether the Japanese are doing this or not is open to debate, but it is reasonable for U.S. officials to pressure them not to.

Spur Consumer Demand

The other change being suggested is for Japan to do more to spur consumer demand in its own country. This may smack of asking the Japanese to become more enamored of material goods than they’d care to. But that is not the point. The point is Japanese government policy throughout the nation’s developing years has been to encourage production and savings rather than domestic consumption. Consumption is in effect taxed, savings are largely tax free. It is an increasingly out-of-date policy for a nation pouring consumer goods out to the rest of world.

But all this has been said before to Japan, and Nakasone has already shown more understanding of the problem and more response than any prime minister before him. It is, therefore, time to cool the rhetoric on both sides. The United States can pressure without meddling. Nakasone can respond without harsh words. However difficult the problem, that will make solving it easier.