Last Nov. 18, at almost the precise moment that Egyptian President Anwar Sadat's jet was touching down at Lod airport in Jerusalem, another diplomatic initiative was being launched on the other side of the world - in Japan. And this one appeared to be degenerating almost instantly into a tense confrontation.
But, remarkably, it didn't . What has happened since then is astonishingly good - perhaps the most noteworthy achievement of the Carter administration to date - although its potential significance has been preceived only dimly.
To be sure, nothing so monumental as Middle East peace was at stake although, in bottom-line economic terms of jobs and markets, it came close. At issue was an effort by this country to convince Japan, steeped in another tradition, that it must open its markets to Western goods to avert a retaliatory, protectionist wave that gradually would exclude Japanese goods from Western markets.
But the effort almost came unglued at critical moments. That it didn't is a tribute first to an unprecedented "team" effort by a number of normally competitive U.S. agencies; and second, to Japan's ability and willingness to consider its own long-range interests over painful short-term adjustments.
One of those moments of near-miss occurred that November weekend when what was intended to be a low-key American mission exploded into a seeming confrontation. Richard Rivers of the Office of Special Trade Representative and Erland Heginbotham of the State Department were supposed to nudge the Japanese into making some trade concessions.
The philisophy behind the mission, evolved by an interagency "assistant secretaries" group, was that neither Japan nor West Germany should add to the already unwieldy $40 billion oil cartel surplus by running huge trade and current account surpluses of their own.
"Japan has a vital interest in the strength of the international trading system," Richard Cooper, under secretary of State for economic affairs, said at that time. "And to the extent that Japan can reduce its surplus, it will reduce tensions in the U.S. and Europe, and defuse protectionist sentiment."
Heginbotham and Rivers were supposed to explain to the Japanese that they had a new role and responsibility, compatible with Japan's status as one of the three leading Free World powers today.
But the Japanologists on the American side instructed Heginbotham and Rivers to suggest an 8 per cent growth rate to the Japanese - and that was a mistake. Not only did the Japanese object that the rate was unrealistically high, but it proved indiscreet to apply any outside pressure in this sensitive area.
The resulting press coverage, which suggested that the U.S. and Japan were at loggerheads, conveyed a sense of mounting crisis, possibly jeopardizing not only economic, but political and military relationships with Japan.
"Half of the Cabinet was upset," a senior official told The Washington Post. More to the point, President Carter himself phoned Special Trade Representative Robert S. Strauss to ask whether the U.S. had pushed the Japanese too far.
Strauss, in general charge of the negotiations, said "no," and assured Carter that the Japanese, for domestic political reasons, wanted something of a public push. But to make sure that the U.S. tactics were on course, Richard Holbrooke, assistant secretary of State for East Asian and Pacific affairs, cabled the U.S. ambassoador in Japan, Mike Mansfield.
On behalf of the "assistant secretaries" group, Holbrooke asked Mansfield whether the U.S. was pressing Japan for things that couldn't be delivered, and whether, in the process, the U.S. might be fueling the very protectionist fires it was seeking to bank.
Mansfield - who in a brief year's time in his Tokyo diplomatic post had earned the respect of the Japanese government - responded in a series of reassuring cables now viewed as crucial.
Had Mansfield's tone been different, the U.S. determination to keep up the pressure might have change. But significantly, the U.S. never again suggested an 8 per cent growth rate - or indeed, any other specific number, reiterating only the importance of faster growth in general terms.
According to Strauss, the final result of a communique issued Jan. 13 is that "Japan has emabarked on an entirely new direction of the greatest significance." Holbrooke and almost everyone else conected with the effort ascribe most of the credit to Strauss' exztraordinary skill as a negotiator. (Equally, Strauss gets high marks from his European counterparts in overall trade negotiations in Geneva.
There is a danger, to be sure, that Strauss' accomplishments can be exaggerated, and this is a point of view held at top levels in the Commerce and Treasury departments. Commerce Secretary Juanita Kreps warns that the Japanese are not likely to abandon their protectionist ways overnight, and that "it all hingers on how rapidly the Japanese are willing to move in the areas they're promised.
Even President Carter may be a bit skeptical. When Strauss' deputy, Alan Wolff, praised Strauss' accomplishments at a Cabinet session, Carter is reported to have said with a smile:
"I see you've learned well from your boss. He told me he got a C-minus agreement that he'd present as B-minus. The way I get it from you, it's as A-minus."
Whatever its ultimate ending, the story had its beginnings in late September 1977, when the U.S. government concluded that the staggering increase in the Japanese current account surplus would be a major political and economic problem for the U.S.
Japanese Prime Minister Fukuda had promised Vice President Walter mendale in February that Japan would run a current account deficit of $700 million in 1977. By fall, it was clear not only that Japan was not running a deficit, but that its surplus appeared to be in the neighborhood of an astonishing $7 billion. (It turned out to be $10 billion.)
The Japanese commitment to a 6.7 per cent economic growth target was also clearly out of reach. At the International Monetary Fund annual meeting here in September 1977, growing hostility to the Japanese resulted in harsh threats of retaliation made publicly by Treasury Secretary W. Michael Bluemnthal and British Chancellor of the Exchequer Denis Healey.
But the Japanese underreacted to these and other early signals. That led to formation of the "assistant secretaries" group in October. This included representatives from the STR office, State, Treasury, Defense, Commerce, Labor, National Security Council, and Agriculture. A key role was played by Deputy STR Wolff, who filled in for and backstopped Strauss.
In seemingly endless meetings, this group determined as a matter of policy that it would not link the trade issue to the equally sensitive question of sharing military defense costs, nor would it deal with the foreign exchange value of the yen (although Assistant Treasury Secretary C. Fred Bergsten had once told the group that "half an hour on the exchange market could mean more in dollar terms than everything else we're talking about.")
It is difficult to cite the precise moment when the Japanese became convinced they would have to make basic changes in their attitude toward imports.
"I told them that they could choose between taking their problems up with their own Diet (legislature), or our Congress," Strauss said in a recent interview. In effect, Strauss was warning the Japanese that protectionist sentiment - especially among U.S. labor unions - could be so overwhelming that the Carter administration wouldn't be able to hold it off.
One consequence of the pressure following the Heginbotham-Rivers mission was inclusion in a new Japanese government announced Nov. 28 by Fukuda of two important new faces: Nobuhiro Ushiba as chief coordinator for international economic affairs, and Kiichi Miyazawa, as minister for economic planning.
Both were key figures in the subsequent negotiations. Ushiba, a former Japanese ambassador here (1970-73), speaks excellent English and knows this country well. Miyazawa, a former foreign minister and potentially a future prime minister, has strong pro-American leanings, and is considered a leading Japanese intellectual.
Fukuda, in political hot water, already had planned sweeping cabinet changes. But the rising value of the yen - it appreciated 22 per cent during 1977 - was agitating Japanese businessmen, and Fukuda knew he had to get something going to defuse the pressure from inside and outside his country.
Encouraged by the Ushiba-Miyazawa appointments, the "assistant secretaries" group developed a shopping list of what it wanted, including symbolic boosts in the Japanese import quotas on beef and citrus fruit, two areas where Japanese protectionist sentiment is especially strong. The plan was to send Wolff to Japan to pave the way for a deal. But Fukuda cleverly preempted the U.S. plan by sending Ushiba here with his own set of proposals.
Strauss & Co. prepared for Ushiba by making sure he would get the full treatment - exposure to key congressmen and senators, as well as members of the Cabinet and blue-ribbon leaders of American industry.
Some of these sessions were eye-openers for Ushiba, as he was to say later. At one, a business group session set up by Assistant Secretary Frank Weil at the Commerce Department Dec. 14, Philip Caldwell, Ford Motor Co. vice president, bluntly told Ushiba that if Japanese penetration of the U.S. car market reached 20 per cent, then Congress would be asked to require that one-quarter of the components in every importer car be American-made.
Ushiba visibly blanched. "That's impossible," he said. "Nothing's impossible," Caldwell replied.
At another important meeting - a luncheon hosted by Sens. Russell Long (D-La.) and John Glenn (D-Ohio), at least 15 senators fired complaints at the special Japanese envoy. Long summed it up by saying, "Basically, Mr. Ambassador, either you can buy more from us or we'll sell more to you."
Ushiba later told his old American friends that things had changed. "When I was ambassador here, the only man I had to talk to on Capitol Hill was (Rep. Wilbur) Mills," he said. "Now, to 'clear' Congress, I have to talk to Robert Strauss."
Ushiba had brought very little with him in terms of broad commitments to reduce the current account surplus or to juice up the Japanese domestic economy. His proposals for 318 modest cuts in tariffs were brusquely rejected as inadequate by Strauss, who startled Ushiba by calling a press conference immediately to blast the Japanese package.
But on the last day of Ushiba's three-day visit, the Japanese Cabinet in Tokyo announced two important decisions: a growth rate target of 7 per cent for 1978 - well over the actual result of 5.3 per cent in 1977 - and, even more strikingly, abandonment of a traditional rule that no more than 30 per cent of the budget could be financed by borrowing.
Those decisions lifted American hopes that Japan's $10 billion current account surplus might be trimmed by as much as $3 billion to $4 billion in 1978. But try as hard as he could, Strauss could not get Ushiba to agree that Japan, as a matter of principle, would give priority to moving into a current account deficit.
So Ushiba went back to Tokyo to report to Fukuda, with Strauss having warned him publicly that he would go to Tokyo to close the negotiations only if the "gap" between the nations could be closed.
After lower-level jockeying by phone, cable and on the spot by the American Embassy team in Tokyo, Strauss decided to go to Tokyo on Jan. 11.
What ensued then tested Strauss' skills at wheeling and dealing, polished over the years on the political hustings here. "Bob keeps everyone off balance, but he known exactly what he wants and what he's going," Holbrooke said.
According to someone who was present, Strauss would say: "Brother Ushiba, help me with my political problem and I'll help you with yours."
Strauss nevertheless found himself in a box when he got to Tokyo because the Japanese proposals - which he considered inadequate in terms of tariff concessions and the degree of commitment to work off their surplus - already had been leaked as final to the Japanese press.
Strauss had taken the precaution to phone Carter from Anchorage to warn him that there might not be a deal after all. In Tokyo, after one look at the draft communique, Strauss said it would never do, and that he might have to phone Carter that midnight to say negotiationns had collapsed.
That caused panic among the Japanese negotiators. A side issue that worked to the U.S. benefit was that the Japanese were simultaneously having problems with the Russians over a Kurile islands agreement, and the Japanese - who attach great importance to the formality of communiques - could visualize a cirumstance in which they would have two ongoing international negotiations in a single week - and no communique to show for either of them.
The two sides got together in a mad-cap session at the American Embassy following a party Mansfield had given in honor of Sen. Ted Kennedy (D-Mass.). When the dinner was over, Miyazawa asked for a private room, and he, Ushiba, Wolff, and Holbrooke adjourned to a second-floor drawing room of the resident and began redrafting the communique. By midnight, the small room was packed with two dozen Americans and Japanese, including Strauss and the Japanese ambassador to Washington, Fumihiko Togo.
By next morning, Ushiba, after night-long negotiations of his own at the Ministry of Trade and Industry (MITI) and the Ministry of Finance, proposed language that Strauss accepted. The final communique said Japan would take steps to achieve "a marked dimunition" in 1978 of its present current account surplus, and thereafter would make "all reasonable efforts" to achieve further reductions, "aiming at equilibrium, with the deficit accepted if it should occur."
In exchange, Strauss readily conceded something the Japanese wanted very badly: a promise that the U.S. would reduce its dependence on oil imports, and a personal expression of confidence that an effective energy program would be passed.
Just as significant, the communique added language designed to achieve "parity" in U.S.-Japan trading relationships by seeking to set "comparable levels of bound tariffs."
TThis issue, scarcely noticed here, eliminates the possibility that in future negotiations, Japanese tariff cuts would be from some theoretical level above the real tariff structure. Now, the U.S. and Japan will start any tariff-cutting from the same real level. (The situation has arisen because Japan had not been required in early tariff rounds to lower its legally binding tariffs as much as other nations.)
Strauss won other concessions, in addition to already well-publicized increases in import quotas of beef and citrus. For example, Japan promised to review and liberalize foreign exchange controls. There is also a commitment to forming Japanese buying missions here. And there is a promise of abandonment of bureaucratic non-tariff barriers - a promise that will be monitored by a "trade facilitation committeee" in the Commerce Department.
None of this is going to happen overnight, as Secretary Kreps warns, and business-wise officials such as Weil hope American industry doesn't make the mistake of sitting back and waiting for Japanese missions to empty American warehouses. "They need to make the effort, and we need to meet them halfway," Weil says. "If so, we can make permanent, big inroads into a vast market. They want to buy our goods, and we can beat the competition (from Europe and elsewhere)."
There is a danger - and Strauss and the others involved recognize it - that if the U.S.-Japan communique turns out to be just words, there could be a real crisis, in the form of heightened protectionism, as early as the fall.
But there is some evidence that the Japanese in the end came to the conclusion that acquiescence to U.S. pressure was in their own interest - as Cooper has put it - "to maintain the open trading system that had served them so well."
What's more, Fukuda and Miyazawa appear to have staked their political futures on the success of the program. If they deliver, Carter can lay claim to a major economic and foreign policy success.