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A New Washington Awaits Hosokawa


WASHINGTON — When Japanese Prime Minister Morihiro Hosokawa arrives here for Friday's summit with President Clinton, he is likely to find that the red carpet welcoming him has a very different hue than the one rolled out for his predecessors during the good old days of the Cold War.

The pomp and protocol will not be all that different, but the diplomatic overtones will. Hosokawa and his entourage of handlers from Japan's powerful economic bureaucracies will find that the rules of engagement have changed in the long simmering dispute over U.S.-Japan trade relations.

Strategic allies or not, Americans are obsessed with their own "economic security" now, and they are redefining the linkage between trade and geopolitical security.

The shift in priorities is subtle and still largely beneath the surface of open policy pronouncements. But early warning signs portend a new mode of confrontation with powerful ramifications for the way the world will look in a decade or so, during the so-called Pacific Century.

For the Record
Los Angeles Times Sunday February 13, 1994 Home Edition Business Part D Page 2 Column 2 Financial Desk 2 inches; 38 words Type of Material: Correction
Japanese investment--A Feb. 6 story on U.S.-Japan economic relations overstated the proportion of sales in the U.S. economy attributable to Japanese companies. According to a report by David Asher of the House Wednesday Group, Japanese firms account for 5% of sales.

No longer, in the post-Cold War era, does the threat of Soviet expansionism--or even North Korea's nuclear brinkmanship--demand that America paper over its nettlesome trade disputes with Japan, the old bulwark against communist domino-tumbling in East Asia.

"The United States is no longer faced with the absolute need to trade off economic interests for security interests," said W. Bowman Cutter, deputy director of the president's National Economic Council and a key White House strategist on Asian affairs. "We have more discretion now."

At stake is not just tension in ties with Tokyo. The old China card, long held up America's sleeve in the showdown with Moscow, is all but forgotten now in an escalating clash between Beijing and Washington over trade and human rights.

Gone, too, is a benign tolerance for developing Asian nations' tendency to emulate Japan's brand of capitalism.

That model of mercantilist state guidance, many critics contend, has allowed booming Asian economies to prosper on exports while protecting home marketsand to take advantage of an open U.S. market while enjoying the benefits of an unconditional security umbrella.

Clinton articulated the evolving attitude on trade and security linkage when he complained about market barriers in a speech to the Asia Pacific Economic Cooperation (APEC) forum in Seattle in November:

"We do not intend to bear the cost of our military presence in Asia and the burdens of regional leadership only to be shut out of the benefits of growth that stability brings," the President said.

It is open to interpretation whether his remark was intended as a veiled threat of military withdrawal--a kind of reverse saber rattling--or a simple plea for voluntary economic reciprocity.


But the President's message was perhaps intentionally vague.

No one has forgotten the blunder Jimmy Carter made in the late 1970s, when he threatened to withdraw U.S. troops from South Korea to push his human rights agenda. Carter's gesture emboldened the volatile Communist regime in North Korea, which the CIA believes now has a nuclear warhead or two in its arsenal.

"We really are out there to defend American interests," said a Pentagon official knowledgeable about Asia. "I don't see us saying that if we don't resolve trade barriers we're pulling out. That's shooting ourselves in the foot."

Still, the U.S.-Japan security alliance--for more than four decades the cornerstone of America's estimated $9 billion-a-year engagement in Asia--may come under mounting pressure if the public perception of economic unfairness grows, analysts warn.

"The problem is that bad economic relations with Japan are souring the rest of our relationship," said Joan Spero, the State Department's undersecretary for economic affairs. "We can't continue to justify to the American people that we maintain these costly commitments without benefiting from the economic peace."

It remains unclear whether Hosokawa can bring to Washington a significant package of results-oriented trade concessions, as the Americans demand. More likely, analysts predict, he will ask Clinton to take the heat off and help him keep his fragile, change-minded coalition in power.

But if tough-talking trade officials in the Administration prevail, the summit could become a benchmark in an unforgiving U.S. trade policy--never mind the political consequences for the reformist Prime Minister.

Ironically, the heat is rising in trade with Japan very soon after the Administration's triumphal "triple play" in global trade initiatives late last year.

In November, Clinton pushed the North American Free Trade Agreement through Congress. Then he hosted the much ballyhooed summit of Asian leaders in Seattle, setting a tentative course for regional economic cooperation.

In December, cliffhanger negotiations gave a new lease on life to the global framework for free-market trade--the General Agreement on Tariffs and Trade.

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