With U.S. and Japanese trade tensions at a postwar peak, Akio Morita, founder and chairman of the Sony Corporation, and Saburo Okita, former foreign minister of Japan, discussed the conflict with Washington Post reporters last week. Okita is chairman and Morita a member of a high-level Japanese advisory committee on opening the Japanese market wider to foreign goods and services.
Q As you know, Japan is facing growing pressures from the administration and Congress to buy more U.S. products in four areas [telecommunications; computers and high-tech electronics; paper and wood products, and pharmaceuticals and medical supplies]. What do you expect these negotiations to achieve? Okita One by one, the negotiations are making progress. . . . But those negotiations will not solve a $36.8 billion trade imbalance [between the two countries]. In the long term, the trade imbalance will also be improved . . . for the short time, there may not be very many results.
. . . Imports are increasing, last year from the United States about 8 percent; from Europe, more than 10 percent increase. [But] imports from Japan increased more than 40 percent. We say we are seriously taking the measures, but the effects of those measures on our part are canceled off by the rising value of the dollar, which makes American products less competitive. Q Secretary Baldrige says that without straining yourselves, you could reduce the trade deficit $12 billion to $15 billion a year, by opening telecommunications, food, tobacco, health, lumber and a whole list of goods. . . . How do you respond to the argument from this side that, indeed, opening the markets and the trade imbalance are linked, very closely?
Okita The Japanese market for telecommunications is about $4 billion in toto, about half NTT (Nippon Telephone & Telegraph Co.), about half outside NTT. So, if American suppliers monopolized the Japanese market for telecommunications, it may give $4 billion. But in this area, Japanese products are very competitive. . . .
Of course, I say Japanese imports should increase, but for the immediate future, the results will not be very spectacular. That was my point.
Q Which means that the problems are going to continue for a long time?
Okita I'm afraid so.
Q Many business leaders are concerned not so much with an immediate change in the trade balance as with an appearance of unfairness [on Japan's part]. What is your reaction to this perception among Americans that U.S. companies are not treated fairly in Japan?
Morita . . . Naturally, I know that in this country, the [trade] restrictions are comparatively much, much less than any other country. But on the other hand, for us there are many, many difficulties [selling in the United States] . . . . But we don't regard that as unfairness. We know that in any country we go into we have to appreciate their customs and local circumstances. . . .
I feel that is our responsibility, to change the situation and to meet the international perception. . . . We understand your point. But in this transition period, many, many small things happen, and many of them were taken by American government officials, American reporters and businessmen, and exaggerated. Now you are upset. In the telecommunications field, we are in a transition period to a liberal system [with NTT, the Japanese government phone monopoly, being deregulated on April 1].Okita The historical difference is very large. To develop an industrialized economy, Japan had to import, and for that we had to push exports. We have been used to that idea for more than one century. Now we are changing since several years back, and we must import. . . . The whole structure and framework was adjusted to promoting exports. . . . That has been our tradition for so many years.
Q How much patience do you think the American public and legislators should have while you work through this transition?
Morita The Japanese private sector is working very hard to get an actual liberalization of the telecommunications system. . . . We are not standing still. We are trying very hard. We are not ignorant of the problems.
Okita There are three factors to the U.S. irritation so-called, or frustration.
One is the regulatory things on imports. . . . second factor, the trade imbalance.
The third factor is the fact that many Americans feel Japan does not play a proper international role commensurate with its economic strength. . . . We must respond to those three questions.
Another unfortunate thing is dollar exchange rate. . . . It has discouraged the import of American products. We hear from NTT and other fields that American products just simply cannot compete by price.
Q Mr. Morita, would you like to go back in your thoughts 20 to 25 years and think what your company would be like today if the American market reacted to foreign products the way the Japanese market does. Would you be an international competitor?
Morita Yes. Sure. . . . Ten, 20 years ago, if American companies really wanted to come to Japan, they had good opportunity. . . . My company tried to assist American companies to come into Japan with a big-sized TV screen. But you know, the Americans at that time were reluctant to modify their sets to the Japanese system. . . . Some fields were restricted, but some fields were open. But at that time, I must say, American industry missed the boat.
Q Do you detect the same change in mood we're seeing -- this impatience, this frustration?
Okita In the past 15 years we have had many differences -- periods of sometimes very strong tension, and sometimes relaxed. But I feel this time it is rather serious. The sheer size of the trade imbalance may be one factor.
Morita We are very much concerned. But as I said before, we are not insensitive. . . . That's why the private sector and also the government side have been working very hard to take the necessary steps, as much as possible. But during the course of this transition, of course there are many, many problems and small misunderstandings. . . . Please do not react to small obstacles. . . . We know this is a serious, critical period. . . .
Q The issue is aggravated by rising imports from the newly industrialized nations in Asia. Will they succeed in following Japan's path?
Okita That is a very important factor. Japan's share of the U.S. market for textiles, radio and many other simple manufactured products is going down very sharply, and Taiwan, Korea, Singapore, Hong Kong is taking our place in the U.S. market.
So this is somewhat historical. Our technology investment went to nearby Asian countries; they started high rates of growth, they started exporting manufactured goods to the United States and other countries. . . .
Q How much pressure in Japan for protection comes from those who lose jobs or fear they will lose jobs, and their representatives? . . . When will the pressures in Japan become the same as they are here?
Morita That's why Japanese industry is spending more and more money on research and development, to create jobs by ourselves. . . . Now we're going into the next generation in video to increase our jobs. We have to develop our own new products. That is the way Japanese companies are running. To keep our people busy, we have to move ahead all the time.
Okita You must move ahead every day, every year.
Q Would you recommend that this country reorganize its government agencies to become more effective as exporters -- by setting up a Department of Trade and Industry, for example?
Morita You have a Department of Commerce but no Department of Industry. . . . I cannot understand why you don't have it. We live in an industrial society, a high-technology society.
The United States has such advanced technology -- in defense, in NASA. Many technologies we are using now came from NASA technology. And we apply that technology into the actual products, the merchandise. Even for us, you have a fantastic technology in the space field, which is ahead of ours.
If some industry in your country used such fantastic technology in the products that could be sold worldwide, I think you could have a very, very strong industry.
Q Why haven't more American companies picked up that technology? You obviously did.
Morita I'd like to ask you. . . . The Japanese industries are paying great attention to search new technology worldwide. . . . We are subscribing to almost all the technical magazines all over the world. And our people are reading all the time. . . .
Even Japanese technology is written in English now, so you have access. If American industry is keen enough . . . maybe they would find very interesting, attractive technology in Japan.
Okita We on our part in Japan also have frustrations and dismay. What should we do under this suddenly increasing pressure on Japan from the U.S.? Many of us feel although we are moving slow, we are confident we are moving in the right direction.
The trade figure has changed so rapidly -- partly because of the strong dollar, partly for other reasons -- our system cannot catch up with that change. Without very drastic export controls on our part, it is not easy to balance trade.
Also, in the long run, we do not feel the Japanese economy is so strong and dominating. We have vulnerability . . . our society is likely to become less dynamic. This may be a period of a surge in Japanese industrial power, but according to our long-range projections, our social security system will go bankrupt in the middle of the 1990s because of a very sharp increase in those over 65 years old. . . .