WASHINGTON — A few weeks ago, one of the Clinton Administration's senior policy-makers recalled with annoyance the time last year when Japan argued that its airlines were too economically fragile to permit new competition from American carriers.
"Here we've had bankruptcies, restructuring, a real shakeout in our own airline industry," the U.S. official said. "Now that we're lean and mean, they can't keep us out. Japan can't say we're too good and ban us from their market. What if we'd said that to Toyota and Datsun in the 1960s?"
It was just a casual remark, but it illustrated the changing dynamics between the United States and Japan. And it demonstrated why the relationship between the two countries seems headed for a period of considerable tension as President Clinton and Japanese Prime Minister Morihiro Hosokawa prepare for a summit next month.
The American economy is strengthening, while Japan's remains in deep recession. The best-selling car in America is a Ford, not a Honda. For the first time since Harvard professor Ezra F. Vogel published his 1979 bestseller, "Japan as Number One," the perception is taking hold in America that the Japanese economy might be downright mortal.
Does this mean the United States will ease the pressure for Japan to bring down its huge trade surplus with the rest of the world?
Absolutely not, answer Administration officials. In a series of recent interviews, top U.S. officials made it plain that despite Japan's recession--or indeed, in some ways because of it--the United States intends to mount an intensive new drive for Japan to open up its markets to foreign goods.
"The basic economic facts of the world haven't changed because we're up and they're down," said W. Bowman Cutter, deputy director of the National Economic Council. "The fundamental fact is that the Japanese economy has not been as open as the U.S. or European economies."
His remarks underscored another important way in which Washington's policy toward Japan is changing. In the past, members of Congress like Majority Leader Richard A. Gephardt (D-Mo.) led the way in pressing for tough trade measures with Tokyo.
Now, under the Clinton Administration, Congress is relatively quiet and the executive branch is leading the charge. Today, Treasury Secretary Lloyd Bentsen will meet with Hosokawa in Tokyo to discuss transpacific trade problems in advance of next month's summit. Clinton took office a year ago with a pledge to end or radically reduce the American trade imbalance with Japan.
Administration officials acknowledge that the President decided to back off last July while elections were pending in Japan. And he continued to avoid confrontation in the summer and fall after Hosokawa took over as the first prime minister in nearly four decades from outside Japan's Liberal Democratic Party.
Hosokawa's campaign to revamp Japanese politics suffered a severe blow on Friday when lawmakers voted down his package of reforms, and some observers said the prime minister might even be a lame duck when he faces Clinton in Washington--if the summit goes ahead as planned.
But with the American trade deficit with Japan still running at $50 billion to $60 billion a year, Administration officials realize they need to make headway with Tokyo quickly--or face the prospect that the President will be criticized in the 1996 election for having failed in his Japan policies.
Cutter and other top U.S. officials argue that the Administration has already given more than enough time and breathing room to Hosokawa's coalition government. "We have to tell Hosokawa, 'We laid low, we gave you a few months, we held back. You have to come through at this point,' " another senior U.S. official said.
At the moment, it appears Washington and Tokyo have such vastly different expectations of one another that they are on a collision course.
There have been suggestions that, during their meeting scheduled for Feb. 11, Hosokawa may ask Clinton to help ease Japan's recession.
Yoichi Funabashi, Washington bureau chief for Tokyo's Asahi Shimbun, said recently that the Hosokawa government may seek temporary depreciation of the yen so Japanese companies can have "better confidence for the future." Such a change in the exchange rates would make Japanese exports to this country cheaper and U.S. exports to Japan more expensive.
Administration officials scoff at that idea, noting that there are some in Washington who believe the yen should be pushed to even higher levels. And more broadly, they reject the principle that the Administration should ease its trade policies to help Japan climb out of recession.
"In the midst of the (American) recessions of 1979, 1982 and 1989, we kept our markets open," Cutter said. "We lost manufacturing jobs, and Japanese industry gained. . . . We're not asking the Japanese to do anything we haven't done."
