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Governor Heads for Japan With Message: Let's Be Fair Now

January 16, 1987|GEORGE SKELTON | Times Sacramento Bureau Chief

SACRAMENTO — Gov. George Deukmejian will leave for Tokyo today on a weeklong trip to deliver two firm messages: his opposition to trade protectionism should not be taken for granted, and Japanese companies no longer have a valid excuse for not investing in California.

Basically, Deukmejian will tell Japanese leaders--including Prime Minister Yasuhiro Nakasone--that his longtime support of free trade cannot be counted on forever unless Japan opens more markets to California products.

And he will remind Japan's corporate leaders that the unitary tax system they tenaciously fought for so many years in California--arguing that it discouraged foreign investment--now has been greatly revised.

Deukmejian's admonitions and cajolings will be delivered in a manner befitting his personality, of course: calmly, politely, slowly and with a grin.

"We're going to be on our best behavior," said a top Deukmejian adviser who asked not to be identified, "but the governor feels very strongly that on trade there should be give on both sides, and so far there hasn't been. And for the Japanese who complained about unitary, now we want them to put their money where their mouth is."

Under the old unitary system, California levied taxes on foreign firms based on their worldwide profits, rather than on profits generated only within the state. The Legislature and the governor substantially changed that last year.

This will be Deukmejian's first trip overseas since he served with the U.S. Army in West Germany during the early 1950s. He did not even have a passport until recently. Asked whether the governor was excited about the trip, another adviser laughed and said: "I don't think he ever gets excited about anything, but I'm excited about his visit. He has a personality that's just right for the Japanese."

Deukmejian's trip is being built around the formal opening by the state of California of an Asian Trade and Investment Office in Tokyo. A similar office will be opened in London in April as part of a $9-million program to promote foreign trade with California.

Thirty other states already have trade offices in Tokyo, but California has had none abroad since 1968, when then-Gov. Ronald Reagan closed down offices in Tokyo, Mexico City and Frankfurt in a budget-cutting frenzy.

Also on Deukmejian's itinerary are a speech to Japan's most influential business group, the Keidanren; a $60,000 cocktail party for Japanese business leaders, hosted by the California Chamber of Commerce; several meetings with government and business leaders, some tours of manufacturing plants and interviews with Japanese news media. He also will visit Osaka and Kyoto--major centers for industry and tourism, respectively--before returning home next Saturday.

In 1985, the last year for which complete figures are available, California exported to Japan $7.5 billion worth of goods. But it imported Japanese goods worth $27.8 billion--an imbalance of almost 4 to 1.

These figures, however, may be somewhat deceiving; no one knows for sure. They are indicative of the overall U.S.-Japan trade imbalance, which in 1985 was a staggering $50 billion. But they are based only on the total value of goods passing through California ports of entry. Therefore, it is not clear how many of the exports originated in other states, or how many of the imports kept on going to other parts of the nation.

Still, Californians know from the numbers that they are getting the short end of the trade stick--and unfairly, most think.

Take nectarines, for example. Japan does not allow imports of the California fruit, contending that it carries a pest called the codling moth.

"We cut open 35,000 nectarine culls--most of them picked up off the ground, where the moths would be--and you know how many moths we found? One," said state agriculture director Clare Berryhill. "They said we didn't cut enough varieties of nectarines. A nectarine's a nectarine!"

Japan also does not permit imports of California rice. "We could deliver rice to the Japanese people for one-tenth of what they're now paying for it," Berryhill said.

One Japanese government official, who agreed to be interviewed on condition that he not be identified, said of rice: "It is politically sensitive and emotional. The Japanese do remember wartime starvation. Self-sufficiency in rice is the emotional core that allows us to be dependent on the world for the rest of our food supply."

But they are not dependent enough on California, in the view of this state's agriculture industry, even though Japan did buy one-third of California's farm produce--over $1-billion worth--in 1985. "There are things that just irritate us and we'll be discussing them," Berryhill said.

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