Japan and the United States have a knack for offending each other. Just as generals can snatch defeat from victory, so some countries can find conflict and contention where there ought to be harmony and agreement.
Japanese-American negotiations over international air rights offer the latest example of this propensity to brawl. If ever common ground for agreement existed, this is it. The Japanese desperately need to spend some of their huge trade and payments surplus abroad. Is there an easier way to do it than by spending more Japanese tourists overseas? And the Americans want to help the Process of lowering air fares to the Pacific and introducing more charter flights.
But, incredibly, the Japanese travel between the United States and Japan is not about to halt, but these antics attest to the precarious state of U.S.-Japanese economic relations. The Japanese display an economic short-sightedness matched only by American diplomatic cluminess.
Japan's basic problem is that it believes that its national interest and the interests of its major international carrier, Japan Air Lines Co. Ltd. (JAL), are identical. They aren't. JAL wants to limit competition, keep air fares and profits high and obtain as many landing rights in the United States as possible. Any airpline ought to be interests in its own prosperity, but Japan's national interest lie elsewhere.
Recall that last year Japan recorded an $1 billion surplus on its current account (foreign trade and American negotiators have managed to overcome these strong mutual interests. The air talks have descended into petty, vindictive acts of diplomacy. Flying Tiger Inc.,an American cargo airline, routinely asked Japanese permission to fly from Tokyo to Singapore - a clear right (the Americans contend) under the existing air treaty. Permission denied. In retaliation, the U.S. Civil Aeronautics Board has threatened to limit Japanese cargo flights to the West Coast. Do that, the Japanese hint, and suffer the consequences.
Children are supposed to play these games, not countries. Air plus a number of other international transactions, such as tourism and transportation). Failure to reduce this surplus can only reapill will for Japan abroad and economic problems at home.
Either other countries will slap trade restrictions on Japan's exports, or the yen's value will continue to rise, making its exports less competitive. Either outcome damages Japan's export potential and reduces its prospects for sustaining rapid economic growth, which, like it or not depends heavily on exports.
Japan's need is simple:shovel out some of its huge payments surplus. Imports are one way of accomplishing this, but a tourist boom is another. It causes people to demand dollars (which can be spent in the United States) instead of yen. And the ingredients (See FOCUS, D10, Col.1) (FOCUS, From D8) for such a boom appear at hand. The yen's appreciation (20 percent against the dollar in the past year) makes it cheaper for the Japanese to travel abroad. A reduction in air fares in the Pacific, which long have levels, ought to provide a further stimulus.
Just how large a stimulus is impossible to say, but the gap between Atlantic and Pacific fare levels is enormous. For example, between New York and London (distance:3,456 miles), the cheapest roundtrip "budget" fare on a scheduled airline is $256, or about 3.7 cents per mile. The cheapest fare on a scheduled airline between Tokyo and San Francisco (distance:5,149 miles) is $938, or 9.1 cents per mile. Pan American World Airways proposed a budget fare of $518 between San Francisco and Tokyo, but Japan rejected it.
The reasons for this gap ar no secret. On the North Atlantic, charter airlines, relying on the natural economics of flying full planes with cramped seating configurations, cut the fare levels of scheduled airlines by half or more! Not surprisingly, Japan effectively has limited charter airline operations to a minimum.
No one should think that right lies entirely on the American side. The Japanese - mainly in the form of JAL - long have felt aggrieved by the existing air agreement between the two countries. Under that agreement, U.S. airlines can fly from 19 U.S. points to Japan. JAL flies from seven. Likewis, Japan wants broader rights to fly to third countries, specially Brazil, where there is a large Japanese colony and substantial japanes investments.
Just why Japan should'nt be given most of what it wants isn't clear - as long as the bargain includes lower fares and a legitimate oppurtunity for charters. The United States apparently is willing to make some concessions. Its major mistake has been tactical: keeping the negotiations at the middle level of bureaucracy.
The sensible thing would have been to combine the air negotiations with bilateral trade talks that occured late last year and early this year. Then the personal participation of Robert S. Strauss, the U.S. Special Representative for Trade Negotiations - with his close personal standing with President Carter - would have made it more difficult for the Japanese to say no.
Maintaining the air talks as to a separate negotiations helps create a permanent air of confrontation between the United States and Japan on economic issues. This is the last thing the Carter administration should want. U.S. - Japanese economic conflicts receive far more attention there than here. Keeping contentious issues alive only compounds Japan's political problem of compromising.