Top presidential trade negotiator Robert S. Strauss expressed new doubts yesterday that Japan can meet the economic targets it promised in last month's trade agreement, and warned that full access to Tokyo's markets may be almost a decade away.
In testimony before a Senate subcommittee, Strauss conceded he was "skeptical" that Tokyo's new stimulus program would spur economic growth to the 7 percent pace the Japanese pledged, or that Japan can eliminate its current account surplus within two years.
Indeed, he told the panel, it may be "an eight-year process" before the United States finally achieves the ultimate goal of the January agreement - full "parity" between the two nations in access to each others' markets. Such a shift would involve a major lowering of trade barriers.
Strauss' new skepticism was part of an effort to avoid what he called "overpromising" in the wake of the new accord for fear it might backfire and refuel protectionist pressures. Earlier, he had termed the pact "a dramatic breakthrough" in trade relations.
Strauss said yesterday he still regards the agreement as a "major change of direction" by the Japanese, who previously had refused even to consider moving away from a purely export-oriented economy. However, he cautioned, "it's only a start" and "we can't change this overnight."
The trade negotiator faced a friendly, but conspicuously wary panel, with members clearly even more skeptical than Strauss about how well Japan would follow through on its promises. Subcommittee chairman Abraham Ribicoff (D-Conn.) openly questioned "the value of" the pact.
Strauss turned the tables on the group, asserting the senators must continue their hard-line stance to show Japan there is unity in the government about their need to make good on their promises. He even invited the panel to visit Tokyo and Geneva early this spring.
"If we neglect this aspect, we may wind up with a few minor trading concessions," Strauss said of the need to maintain pressure on Tokyo. "But if we follow up properly, we may have truly brought about a major positive step forward for our international trade posture."
The trade negotiator made several other points, all for the benefit of skeptical subcommittee members:
He reiterated his pledge that "we're not going to jump into any silly treaties" in the multilateral trade negotiations (MTN) now underway in Geneva, promising that if the agreement ultimately reached is not "equittable" he would "leave it in Geneva and go home."
He confirmed that trade negotiators are "falling behind" in their drive to reduce so-called non-tariff barriers, such as quotas, in the talks - a key goal of U.S. trade strategy. Strauss said other efforts, such as those to work out "safeguards" for weak industries, "are moving along."
He estimated that Japan's new interest in buying American-made machinery and equipment for nuclear plants ultimately could turn into a $2 billion-a-year business for U.S. manufacturers far larger than first appeared. Tokyo is sending a team to look at U.S. supplies.
Strauss also hinted again he probably will oppose a recent recommendation by the President's Council on Environmental Quality that the United States require exporters to make their products conform to domestic environmental standards.
Strauss balanced his caution over the Japanese situation with a vigorous defense of the January accord, which he asserted marked a major policy change on Tokyo's part. While it would be wrong to overstate what the pact means, he said, "we should not underestimate its potential."
At one point, Strauss sharply refuted assertions by Sen. Carl Curtis (R-Neb.) that the agreement was essentially worthless and was virtually unchanged from an earlier version in December. "That's just factually incorrect, Senator," the trade negotiator snapped.
Strauss also disputed arguments by senators that the administration should not have proposed eliminating the present tax-subsidy for domestic international sales corporations (DISC), but rather should have sought to "bargain it away" at Geneva in return for other concessions.