Probably no businessman is as familiar with the United States and Japan as Akio Morita, chairman of the Sony Corp., who spends almost as much time managing his world-wide enterprise from New York as from Tokyo. Therefore, when Morita says, as he did to a small group of influential American and Japanese opinion-makers here the other day, that Japan resents American "high-handedness," they all sat up and paid attention.
Morita said that the persistent pressure from the United States (and from Europe) to "make more concessions" so as to reduce the Japanese trade surplus is becoming oppressive. "Instead of treating Japan as a friend, the U.S. and Europe are ganging up on Japan . . . treating us almost as an enemy."
He conceded that "fair criticism" could be made of Japan's failure to abandon import quotas on tobacco and other agricultural products, and certain annoying nontariff customs and other barriers.
"But I think Americans are too wrapped up in their own economic difficulties and frustrations to think about the impact of what they are saying and doing to their allies. This is causing a lot of trouble, not just in Japan, but also in Europe, and it is eroding the very fabric of the free world."
These are tough words, reflecting the bitter assessment in Japan that it is taking a bum rap for the inability of American industry to compete. The Suzuki government, always anxious to avoid a public confrontation with Washington, would rather that Morita had remained silent, I am told. But Morita was accurately reflecting the opinion of his peers: American companies exhibit a lack of competitiveness, a weakness that is exacerbated by a Reagan economic policy mix producing an overvalued dollar.
But there is equal bitterness here, and the Japanese have been slow in assessing it. Yale Prof. Hugh Patrick, commenting on a round of talks with U.S. congressional leaders, observed: "When the 'friendlies' are as unfriendly as they are, you have to worry about the 'unfriendlies.' There is increasing frustration about the huge Japanese trade surplus , and it will get worse instead of better."
A recent report by Rep. Sam Gibbons' (D-Fla.) House Ways and Means subcomittee on trade bluntly warned Japan that its "societal" disinterest in imports "is bringing out the anger of all the rest of the world." It cited a uniform criticism of Japan in Southeast Asia that "Japan is an unfair trader . . . the Japanese simply do not want to import."
The American bilateral trade deficit with Japan last year was about $18 billion, and could hit $25 billion this year. Never mind that comparing bilateral trade balances can give a distorted view of world economic relationships. The United States, for example, has a sizeable bilateral surplus with Europe, and surely would resist European demands that we make "concessions" to reduce the surplus.
And never mind that the United States enjoys a huge world-wide surplus on its sales of services--$36 billion in 1980, while Japan had a services deficit of $11.3 billion. The hard political fact is that there is a high visibility to the trade imbalance, and that gets translated into "lost" jobs--as in the auto industry--and ultimately into pressure on Congress to "do something."
As unemployment rises, and the United States sinks deeper into the economic morass that Morita so well described, nothing is more easily nurtured than a protectionist attitude. The buzzword on Capitol Hill today is "reciprocity"--bilateral reciprocity, that is--a principle according to which the U.S. government should take steps to assure that American businesses have the same access to overseas markets that foreign firms enjoy in trading with the United States.
If the United States were to put conditions on access to its market, in a transparent effort to block Japanese imports here, it would run counter to traditional American reliance on the "Most Favored Nation" principle, according to which a nation must treat all others equally in its own market.
The case against reciprocity legislation was brilliantly made in a Washington Post op-ed page article on Feb. 11 by Brookings Institution scholar Philip Trezise. Trezise is also a director of an American-owned subsidiary of the Bank of Tokyo.
Reciprocity is merely a back-door approach to protectionism. Yet, the Reagan administration, theoretically committed to free trade, displays a great ambivalence. Officials say they are uncertain of what Congress intends, that they would not endorse the language of any bill in advance, and that they want to be absolutely certain that reciprocity does not deteriorate into protectionism.
Yet, it's abundantly clear that President Reagan's two chief trade policy spokesmen--Ambassador Bill Brock and Commerce Secretary Malcolm Baldrige--are in fact using the congressional drive for reciprocity as a lever to force Japan to open its markets wider. They are supported, as well, by key State Department offials.
Baldrige, worried that American high technology industries that used to excel are losing their competitive edge, seems more ready than Brock to twist Japanese arms with the reciprocity idea. He claims, for example, that Japanese producers have picked up 70 percent of the market for the 64K RAMs, a state-of-the-art micro-chip memory, by slashing prices "to the point where they are driving the U.S. out of the market."
It's doubtful that Baldrige can back up that claim. For example, Edson Spencer, chairman of Honeywell Inc., one of the major buyers of 64K RAMs, suggests that the Japanese have taken the lead in this micro-chip not because of price, but because "the Americans got there late."
Spencer says that Honeywell has three suppliers of 64K RAMs, all Japanese, because American producers don't yet have 64K RAMs for sale. In the next few months, Spencer says, some U.S. producers will be offering 64K RAMs, "and everything else being equal, we'd like to do some business with them." That means, Spencer told me, that they will have to meet Japanese standards of quality as well as price.
The President's Cabinet Council on Trade and Commerce has undertaken a study of American hi-tech industries, and what their competitive problems are. This study will take three or four months to complete. Undersecretary of Commerce Lionel Olmer, who has a large role in the Cabinet study, is convinced the situation is serious--that the more important an industry is to the U.S. economy at large, the greater the loss of U.S. competitiveness. He's thinking of semiconductors, steel and robotics, among others.
The danger is that the frustrated American response to the Japanese success--in these new fields, as well as autos and consumer electronics--will be to drift into "reciprocity" legislation as a painful necessity, denying, at the same time, that it is protectionism by another name.
Slow economic growth in the industrial free world is working against free trade. Even if Japan abandons all of its trade restrictions, and makes access to its markets easy instead of difficult, it is likely to continue to be a major exporter of goods, with a hefty surplus. As the U.S. economy continues to shift away from goods and toward services, it should continue to enjoy surpluses on services exports.
It will take a great deal of effort on the part of both Japan and the United States, the two economic giants of the free world, to defeat the internal forces for protectionism within each country. Japan could allay some of the bitterness here by contributing more funds to world-wide economic development, and also by picking up a greater share of its own defense costs. The United States, for its part, will have to be more honest about its own shortcomings, modernizing the economy, stressing productivity, and re-borrowing the labor-management techniques that Japan wisely adapted from the United States in the 1950s.