As the first U.S. President born after World War II and the first elected after the end of the Cold War, Bill Clinton faces the challenge of transforming an asymmetric, deteriorating and outmoded relationship with Japan into one that is genuinely equal, constructive and befitting the 1990s and beyond.

Japan itself can contribute to this long-overdue change, but for the United States, at least seven actions are imperative.

\o7 * Formulate a Japan policy: \f7 Japan is too important to forget each time the trade deficit dips or a Bosnia erupts. Implementing a national competitiveness strategy is a necessary condition to deal with the "Japan problem." But even if the United States had no federal budget deficit, the highest saving and investment rates in the world, the best education and work force training system in the world, etc., these alone would be inadequate to address the profound challenges posed by Japan. What is needed is an explicit, coherent and strategic policy focused on Japan.

\o7 * Recognize that Japan is different: \f7 Economic orthodoxy to the contrary, Japan \o7 is\f7 different from the United States in its political economy, more so than any other advanced industrialized country. U.S. policy must take account of these differences--not "unfairness"--in market structure and conduct, the role of the government, the idea of competition, the value attached to domestic control of manufacturing, the desire for self-sufficiency and the deep distrust of foreign suppliers--rather than assuming, as U.S. policy has since 1945, that Japan's economy will automatically come to resemble America's.

Sony Chairman Akio Morita asserts that Japanese companies expand market share through cut-throat pricing, underpay and overwork their employees, pay meager dividends to shareholders, neglect the environment and make insufficient philanthropic contributions.

Given these differences, negotiations with Japan must focus on results, not process and procedure--no matter how alien this may seem to American notions of how "the market" should operate. Furthermore, such futile efforts to "remake Japan" as the Structural Impediments Initiative should be abandoned.