The Japanese Trade Barrier Bugaboo

...MICHAEL BERGER, who has written for the NL from Japan, is now a reporter for the San Francisco Chronicle...

...The Japanese drive on the left.J" ALL OF THIS adds to a trade imbalance that both U.S...

...But those who have studied the situation maintain that it is all too easy to overestimate the effect of a stubborn customs inspector in Yokohama or a nationalistic bureaucrat in Tokyo or a determined Japanese lobbyist...

...coal comprised 58 per cent of all Japanese imports...

...For all their business acumen and prescience, they have failed to anticipate how the American misperception of their trade barriers stimulates protectionist sentiment...

...No one denies that selling to Japan is a difficult, initially costly proposition exacerbated by its trade barriers...

...To mention one example: After his on-the-job training as deputy secretary of commerce in the Carter Administration, Frank Weil suggested the creation of an organization that would combine some characteristics of the U.S...

...Six weeks,' he answered...

...The increasing deficit occurred despite a drop in oil imports," Baldridge said, "and is asign thattheU.S...

...government official cited earlier...

...TheU.S...

...The same holds true elsewhere...

...Meanwhile, the most precious and perishable international commodity— time—is working against the U.S...

...In the '50s and '60s the Japanese signed more than 25,000 contracts for American technology at a net price of only $6 billion or so...

...Japanese furniture buyers who come to this country, for instance, like the styles and materials, but the size is wrong...

...As things stand, their barriers are obscuring the heart of the matter and fostering American myopia about what needs to be done...

...Having a longer planning horizon gives Japanese firms a tremendous edge...

...American coal interests claim they plan to invest billions in constructing the transportation and port facilities necessary to make their price competitive with the Australians', who have come to dominate the Japanese market...

...A." goods, this country's trade deficit with its Pacific ally would disappear...

...Consumer electronics is an instruc-tivecase...

...The American "get rich quick" preoccupation founders in the marketplace, especially when coupled with smugness about the invincibility of Yankee ingenuity...

...When Japan, having become a formidable world trade competitor could no longer be ignored, American business leaders nonetheless remained largely insular, lacking the imagination and foresight to abandon their negativism and begin to cooperate with Washington in the formulation of a world trade policy for this country...

...They could adjust their trade and monetary policies to head off this distortion of the issues...

...And two additional factors complicate the United States' position...

...In contrast, some 25 years ago when industry in Japan was still recovering from wartime devastation, government planners there studied world market trends and made a long-range decision to invest in consumer electronics...

...The statistics suggest otherwise: Five years ago the Japanese limited imports more severely than they currently do, and our deficit was $8 billion...

...Various special agreements have been concluded with Tokyo, but these have merely papered over the fundamental fact that for the past 15 years the competitiveness of American products and raw materials has been declining in the Japanese market—to the benefit of Canadian, Australian, European, and Asian firms...

...If the Japanese deserve harsh criticism on any single point, it is their continuing insensitivity to the American political and economic scene...

...autos haven't sold in Japan," he continued...

...I spoke with a California winery representative the other day and asked him how long he was willing to wait for his sales to turn a profit...

...Commerce Secretary Malcolm Baldridge has noted that our negative balance of payments last year amounted to $39.7 billion, the third worst on record and an 8.8 per cent jump over 1980...

...Of every 10,000 citizens in the United States, 20 are lawyers and 40 are accountants...

...I told him to forget it...

...Assuming American models were cost-competitive, they'd still be too large...

...Out of the same number, too, Japan has400 engineers and scientists, the United States has 70...

...The Japanese are able to focus far into the future, usually because their major funding comes from banks instead of stockholders...

...Werefusetoadaptourproductsto their standards and needs, although we've seen how the Japanese have succeeded in our market by adapting their products to American standards and tastes...

...Structural differences also reflect the underlying values of the two nations...

...First, we continue to spend a disproportionate amount of money, time, energy, and talent on dubious military projects...

...The greatest irony in the ensuing success story is that American companies, arrogantly believing the Japanese could never be a serious competitor, sold them the technology they needed to get started and thereby virtually forfeited their own chance to dominate international electronics markets...

...today it is less than 20 per cent...

...That's also a major reason why U.S...

...What is more crippling, we have become, in the words of former Presidential speech writer and author James Fallows, "a 'clean hands society,' where thosewho invent, produce and sell products gradually give way to those who manipulate and rearrange laws, assets, processes, and ideas...

...Indeed, the realities of the problem have been distorted by special interest groups—businesses, industries, unions—lobbying for protection from Japanese competition...

...What hurts American business abroad more than anything else, according to many of the figures in government and commerce I have interviewed, is a short-term business mentality...

...A view closer to the truth than the Administration' s assessment was expressed recently by the president of the American Chamber of Commerce in Tokyo, Lawrence F. Snowden, who observed that eliminating all the Japanese trade barriers would not wipe out the trade imbalance: "What it would do is take the political heat out of the question...

...competitive position has slipped in world markets...

...Last year it was $15.8 billion and now, with still more barriers coming down, the gap is being projected as high as $25 billion...

...Testifying before the Senate Small Business Committee, Reich crys-talized his worries into a single statistic: "Of every 10,000 citizens in Japan, only one is a lawyer and three are accountants...

...and they don't have steering wheels on the right-hand side...

...We're inflexible," said the U.S...

...Even in industries where American firms continue to have many potential overseas customers, they undermine themselves with their narrow marketing outlook...

...International trade policies have been proposed, to be sure, yet only to be rejected...

...The creation of FIS would of course require basic shifts in the structure of our economy, including complex and no doubt controversial legislative reforms...

...Robert Reich, a lawyer who teaches business and public policy at Harvard's John F. Kennedy School, shares Fallows' concern about Americans who are good at" playing the angles" or speculating achieving dominance over those who work at developing or selling a product...

...In several important sectors it has already resulted in the competitive battle being lost...

...It was no lucky guess, as Toshio Takai, executive vice president of the Electronic Industries Association of Japan, explained in a recent issue of Business Week magazine: "In the late 1950s, the European and American industries were paying more attention to military and industrial electronics than to consumer [goods], so that was what we decided to concentrate on...

...In 1967, U.S...

...The Americans are late in confronting the challenge, though, and face a tough fight with no certain prospects of success...

...Still, one can't help feeling that this method would be more realistic than our present approach, which is to simply blame the Japanese for our self-incurred weaknesses...

...Weil's Federal Industrial System (FIS) would pick the nation's industrial winners and allow the moderate decline of noncompetitive sectors...

...Federal Reserve Board with Japan's Ministry of International Trade and Industry (MITI...

...American concerns almost always operate on much briefer cycles, keyed to quarterly earnings per stockholder share...

...In the late '60s and early '70s, we chose to mire ourselves in a one-dimensional haggle over Japanese commercial restrictions and import quotas instead of planning an international trade policy...

...could have taken the lead in this field, but squandered most of its opportunities...

...and Japanese government officials privately admit will persist for a long time...

...Rooms in Japan's homes and apartments are much smaller than in the U.S.] When our furniture makers are asked to scale down their products for this market they refuse...

...One official who asked to be left unnamed told me: "Most of our companies remain unwilling to absorb early losses in the Japanese market for the sake of longterm profits...

...In Japan, the most dramatic example of this alarming trend is America's dwindling share of the coal supply...