The four days of intensive trade talks between the United States and Japan this week have produced modest but important progess toward prodding the Japanese into dealing with their lopsided trade balance.
Although the negotiation still are far from complete, the U.S. won some initial concessions from the Tokyo government. At the same time, the two sides still are a long way from anything approaching an accord.
The impact of what happened can be measured best by reviewing what the U.S. is seeking from the Japanese - a commitment by Tokyo to eliminate its burgeoning trade and investment surplus, now estimated to reach $10 billion this year.
The major hope of U.S. officials was that Japan would stimulate its lagging economy, both to broaden the market there for imports and to ease domestic pressure for more aggressive export efforts.
The White House also wants the Japanese to ease import restrictions on a spate of U.S. products - mainly beef, citrus fruits, leather and silk. For the longer-run, it's seeking hefty tariff cuts on a variety of items.
What the U.S. actually got was a promise by Tokyo of a sizeable economic stimulus package designed to spur the lagging Japanese economy to a growth rate of 7 per cent - a major departure for the conservative Fukuda government.
Depending on what's is in it, the package could prove to be a giant step toward eventual attainment of the U.S. objective. Sources here figure the measures could pare the Japanese current account surplus by $6 billion to $7 billion - about 60 per cent.
Just the same, the stimulus package wasn't the result to U.S-Japanese negotiations. As critics fairly point out, the move was spurred more by sagging domestic economic conditions and the runaway appreciation of the yen.
What still must be negotiated are the U.S. demands for more substantial short-run concessions on tariffs and import quotas, and the longer-un revamping of a variety of other trade restrictions. And there the two sides still are aplit.
The surprise disclosure of the stimulus package was a last-minute goodwill gesture. Nobuhiko ushiba, Japan's foreign trade minister, wasn't here to negotiate - only to reassert Tokyo's position and test the winds in Congress.
Ushiba's mission seemed to be to regain face for Japan by taking a hardline stance to the Americans, and to pave the way for possible concessions later by evoking U.S. critcism that the plan was insufficient.
Indeed, the Japanese envoy made clear that serious negotiations couldn't really begin until after the government announced its new stimulus package at home on Dec. 21.
Almost as if to undeescore that, shortly after Ushiba spelled out Japans's secret tariff-cutting proposals in private. Tokyo announced them publicly - precluding any early U.S. efforts to suggest changes.
"We really were shocked by that," said one U.S. official last night. "We expected to have a little room for bargaining, but all we could do was reply in public. There were no real opportunities for give and take."
Despite such unexpected limitations, the talks this week did produce some modest progress:
For one thing, Japan now is visibly more aware of the apparent determination with which the U.S. and the other industrial powers now are willing to pursue the sought-after reduction in its current account surplus.
For another, with the Ushiba confrontation out of the way, Tokyo now has performed the necessary political ritual required before Fukuda can make any serious turnaround in his long-range economic policies.
Still, serious differences remain between the U.S. and Japanese authorities. Despite the announcement yesterday, Tokyo still is unwilling to run a current account deficit, as the U.S. has asked - only to reduce its surplus.
And the White House still regards the new Japanese tariff cuts as too narrow and too small. Officials see no certainty yet that the Fukuda government will be willing to make the long-range cuts the administration wants.
What remains is for the U.S. to push further to beef up the remainder of the Japanese package - and seek commitments for more serious tariff cutting as part of the multilateral trade talks in Geneva.
Ushiba brought with him an eight-point program that included some surprises, such as proposals for special import financing and more open government procurement practices. But most of the measures were scant ones.
The likelihood now is that Robert S. Strauss, the U.S. special trade representative, will fly to Tokyo in early January to hammer out what hopefully will be the basic outline of the U.S.-Japanese accord.
After that, if all goes well, officials says there may be another, possibly lower-level meeting, to settle minor details. And then, perhaps in five or six weeks or so, the controversy will settel down.