U.S. Trade Representative-nominee Clayton K. Yeutter, talking tough to the Japanese, yesterday said he rejected Japanese suggestions that Japan ease the trade imbalance by restricting its exports to the United States rather than opening Japanese markets to American goods.
However, Yeutter also admonished uncompetitive American industries and Congress. Yeutter called the fact that talks between House and Senate budget conferees yesterday collapsed without any plan for deficit reduction "tragic." Yeutter said that the federal budget deficit "is our No.1 economic problem of the moment, and if we don't address that, it's regrettable."
Yeutter's comments came during a three-hour confirmation hearing before the Senate Finance Committee. Senate Majority Leader Robert J. Dole (R-Kan.) said he hoped the Senate would vote on Yeutter's nomination Thursday or Friday before Congress takes a 10-day recess.
News reports from Tokyo have suggested that the Japanese government is considering restricting exports to the United States rather than allowing more American goods to be sold there. As far as the Japanese are concerned, "we have major challenges ahead of us in that relationship," Yeutter said. He said it would be a "tragic mistake" if Japan decided to restrict exports rather than open its markets.
The United States and Japan have been engaged in talks since January to open Japanese markets in the area of telecommunications, electronics, forest products, and medicine and pharmaceuticals. While some progress has been made in telecommunications, negotiations in other areas has been slow, administration officials said.
Yeutter said he did not want to shut down U.S. markets to Japan, but "Japan simply cannot expect to have its cake and eat it too."
Yeutter also said he was concerned "that the level of rhetoric has become increasingly harsh" between Japan and the United States and is now having negative effects.
Yeutter had harsh words for some U.S. industries that he said are not competitive and expect government bailout. Yeutter said the United States certainly has gone through deindustrialization in some areas, but "some labor-intensive industries need to learn to compete. At some point in time we must tell those industries they must compete or shift their employes elsewhere."
Industries involved in national security are another matter, but uncompetitive industries that are unrelated to national security should understand they "can't depend on the government's largesse," he said.
If confirmed, Yeutter will take the helm of trade policy at one of the worst points of U.S. trade history. Last year, the United States had a record merchandise trade deficit with the world of $123 billion, and it is expected to be even larger this year. In addition, the United States this year became a net debtor nation for the first time since 1914.
Yeutter called the present trade deficit "unsustainable" and said that an estimated deficit of $150 billion this year "just cannot go on. The nation is not going to collapse," but there will be incalculable damage to key sectors such as farming and steel.
Yeutter has been president and chief executive officer of the Chicago Mercantile Exchange since 1978; he also was assistant secretary of agriculture for marketing and consumer services and assistant secretary of agriculture for international affairs and commodity programs during the 1970s. He was deputy special trade representative under President Gerald Ford.