A key U.S. trade official warned yesterday that the recent decline in the Japanese worldwide trade surplus may be no more than temporary, arguing that further "structural changes" to attract imports and investment need to be made by Japan.
Ambassador Alan W. Wolff, deputy to special trade ambassador Robert s. Strauss, told the American Bar Association here that unless these adjustments are made, "a nationalist, in-ward-looking reaction" against Japan is possible, in the U.S. and Europe.
But Wolff was moderately optimistic that the present government of Japan would continue the process of opening up its markets and contributing to world economic growth.
"The change will come, the adjustments will be there," Wolff said. "The question is whether it will be fast enough to avoid building up pressures that can still threaten the prosperity of the world."
At the same time, Wolff lashed out at those who suggest an across-the-board barrier or special tax on Japanese goods. Although he did not mention Republican presidential hopeful John Connally by name, he paraphrased and sharply criticized Connally's suggestion to "let the Janpanese sit in their Datsuns and look at Sony television sets."
The "structural" changes that Wolff urged for Japan include revision of its distribution system, which impedes the flow of imports into Japan, allowance of acquisitions of existing Japanese enterprises, and the free expansion of chain stores, including those owned by foreigners.
On another contentious point, the "Buy Japan" policies of government-owned monoploy enterprises, Strauss reached an agreement last week that eventually will achieve reciprocity in the U.S., Japan telecommunications trade.
Earlier, Japan's refusal to allow Nippon Telephone and Telegraph to open overseas competitive bidding on procurement had blocked the mutual application of a proposed government procurement code, one of the achievements of the miltilateral trade negotiations (MTN).
Strauss told reporters at a breakfast conference yesterday that there would be full reciprocity between Japan and the U.S. on telecommunications trade at the end of 18 months. He said that Japanese standards had been "very rigid," designed to protect their home markets, while U.S. standards had been set up to protect consumers.
Codes defining and limiting standards, customs valuation and other practices created as non-tariff barriers to imports are a crucial part of the new MTN. Coincidentally, Strauss yesterday sent a draft bill to the House of Representatives, starting the legislative process that is expected to end with congressional approval of the Trade Agreements Act of 1979.
In his speech, Wolff said that the MTN agreement places Japan's import barriers and obligations "on a par with those of other industrialized countries. Japan's tariffs will be set at virtually the same levels as those of the United States.
On non-tariff barriers, Japan will sign all of the codes set out in the MTN, including the government procurement code, which threatened to be a stickler for a while because of the N T & T problem.
But Wolff warned that the codes would have to be monitored closely. "It is not enough for a country to stay a code will be adopted as domestic law . . . We must be sure [the code] are adopted abroad, both in Japan and elsewhere, both in letter and in spirit," he said.
For its part, Wolff added, the U.S. also must respect the rules and "not bring cases because we are unwilling to tell a powerful interest group that they do not have a case."