U.S. Special Trade Representative William Brock revealed tonight that the American trade deficit with Japan will be up almost 50 percent this year to $14 billion or $15 billion. He described this as an "enormous" gap that is likely to restimulate protectionist pressures at home.
It was the first official estimate of the 1981 bilateral trade deficit with Japan, and Brock told a reporter that the larger deficit represented increased imports across the board, stimulated by a cheaper yen. This is one of the consequences of the soaring value of the U.S. dollar in response to high American interest rates.
Brock was here at this resort town near Tokyo for a dinner address to a high-level private gathering of Japanese and American leaders called the Shimoda Conference after the Japanese city where the first such meeting was held in 1959. He is completing a swing of 10 southern Asian nations, which he said constitute "the most exciting region in the world."
Brock told the conference that the increasing Japanese trade surplus makes it imperative that this nation "open its markets much wider," even though there have been substantial liberalizations of import regulations, some of which the American public does not know about.
He said that at the present time there is a great admiration in the United States for Japanese skills and management techniques. But he said that if this "reservoir of good will generated by those perceptions is to be tapped for the benefit of our overall relationship, Japan must overcome the widespread perception in America that it does not play fairly in the international trading arena."
In his prepared remarks and in a subsequent press conference, Brock said that publication of bigger trade deficit numbers with Japan will come at a time when American interest rates are high, economic growth has turned negative, and inflation is still a problem although off from its peak earlier this year.
Against that background, the trade official predicted that there will be increased demand in the United States to use the trigger-price mechanism to limit steel imports and to hold down textile imports through a more restricted agreement on so-called multifiber products.
The burden of Brock's address was an appeal for freer trade. He said that the world's economic system can not move in that direction during the current decade unless both Japan and the United States exert leadership for open markets and against protectionist tendencies.
He said he understands that such a leadership role will not be easy either for Japan or the United States. "Japan still finds it uncomfortable to open itself to foreign economic participation. Powerful social and cultural forces and an enduring sense of economic vulnerability make trade liberalization an excruciating process for Japan," Brock said. "As for the United States, while we are not perfect, to the extent it is within our power we will maintain open markets, and we will insist that our trading partners reciprocate."