Treasury Secretary G. William Miller today warned Japan that it must take further steps to break down trade barriers against U.S. exports if it expects the administration to be able to hold the line against rising protectionist sentiment in the United States.
Miller, in a luncheon address to the Japan Society here, said that "until it is truly as easy to sell in Japan as in the United States, there will be a lingering impression that trade with Japan is not reciprocal.And as long as that impression exists, Japanese exports will be particularly vulnerable to protectionist demands."
Although in recent years Japan has been running a payments deficit while the U.S. account with the rest of the world has moved into balance, Miller said it is "difficult to shrug off the fact" that Japan ships $9 billion more exports to the United States than the United States sends to Japan.
Japan's biggest inroads in the United States have been in automobiles, steel and consumer electronic products -- from television sets to stereo equipment.
The administration just reimposed a tougher system of minimum prices for steel imports to ward off a host of legal suits against Japanese and other steel makers by the U.S. industry.
The International Trade Commission currently is investigating a charge by the United Auto Workers and Ford Motor Co. that Japanese automobile exports are injuring the American auto industry and workers. The union and the company want the trade body to recommend that the president impose sanctions against Japanese auto imports.
Miller said the administration welcomes "recent Japanese government statements indicating its sensitivity to the short-term adjustment needs of the U.S. auto industry" as domestic car makers try to shift their production from big cars to smaller, more fuel-efficient vehicles.
But Miller said the automobile issue is longer-term in nature and that Japanese automakers must consider steps such as using more U.S. auto parts in the cars they make for sale both in Japan and in the United States as well as establishing "automobile production facilities in the United States." w
Miller pinpointed two areas where U.S. industries are being frozen out of the Japanese market even though the American products are "competitive" -- telecommunications equipment and tobacco products.
"Access by U.S. firms to Nippon Telephone and Telegraph Corp.'s procurement of communications equipment has been an issue of contention in our bilateral relationship for years. The issue has attained particular significance as a symbol of a closed Japanese economy due to the delay in reaching agreement on high-technology items important to continued U.S. competitiveness in international trade," Miller said.
"A similar case involves access to the Japanese market for U.S. cigarettes, cigars and other tobacco products. That market, like the market for telecommunications equipment, is controlled by a government monopoly. Competitive opportunities for foreign producers in these markets can, and must be, substantially improved."
Although Japanese officials say privately that they recognize the need to reduce some of their import barriers are toying with the idea of forcing their industries to restrict exports to the U.S. to forestall a serious trade war, Japan too is beginning to feel a pinch from lesser-developed countries in its traditional export markets.
Japan has relied upon lower wage rates and more efficient production to be able to undersell foreign competitors. But Japan already has lost much of the textile market to countries like South Korea, and its steel industry is facing heavy competition from lower-wage Asian countries, too.
In another development, Miller told reporters that, with a decline in open market interest rates during the last 10 days, the nation's banks should "look to the earliest opportunity to adjust their rates downward."
Both President Carter and Miller have criticized the recent increase in the bank prime lending rate to 13 1/2 percent, charging that economic conditions do not justify the rate and that high interest rates could impede the economic recovery they think is getting under way.
Miller said he is "particularly concerned" about the impact high interest rates are having on construction and automobiles. "High rates make [automobile] dealers reluctant to purchase cars" because of the high cost of financing inventories, he said.
"No matter how much showroom traffic" is generated by interest in the new small cars, he said, there cannot be a real recovery in automobile sales unless dealers have the cars on their lots available for purchase by potential customers.