President Reagan wanted to talk about beef and citrus, longstanding trade irritants between the United States and Japan, when he met Prime Minister Yasuhiro Nakasone in the White House Oval Office for the first time more than three years ago. But Nakasone replied that others should deal with the beef and citrus problem; he wanted to discuss global issues.
According to Nathaniel B. Thayer, director of Asian studies at John Hopkins' School of Advanced International Studies and a sometime ghostwriter for the Japanese prime minister, the president tried once more to bring up the trade issue. But when Nakasone again demurred, Reagan put away his three-by-five cue cards and the two men talked global issues.
Nakasone is scheduled to hold his eighth meeting with the president at Camp David today, and despite a nearly $50 billion U.S trade deficit with Japan and a number of unsettled trade matters, global issues such as terrorism, disarmament and the Philippines are expected to dominate their conversation.
To the Japanese, this is the sign of their acceptance as equals by the industrialized West. And to global thinkers in the White House, Pentagon and State Department, it means that the two leaders are focusing on the totality of what U.S. Ambassador Mike Mansfield calls the most important bilateral relationship in the world.
But many on Capitol Hill believe that unless trade dominates the talks, it will show the weakness of the administration in dealing with a record $148.5 billion trade deficit.
A bipartisan majority of the Senate, asserting that Japan is "unwilling to assume the burdens and responsibilities incumbent upon the second-largest economy in the free world," urged President Reagan a month ago to make trade a main focus of his talks with Nakasone.
A senior administration official, however, insisted on Friday that trade still remains the major problem in U.S.-Japanese relations despite gains over the past year in getting Japan to open up its markets. "I wouldn't say by any means we are out of the woods. With larger deficits looming, we have to keep it [trade] on the front burner."
Nonetheless, the explosion of protectionism that roared through Congress in the fall has died down. The mood is different from last spring, when the Senate, by a 98-to-0 vote, passed a nonbinding resolution assailing Japan for its closed markets and mercantilist trade policies. Concerns that another spring spate of Japan-bashing could erupt on Capitol Hill when the U.S. trade figures for 1985 were released prompted some State Department officials to suggest earlier this year that Nakasone forgo this visit.
But the pressure seems to have eased, at least for the time being, and administration trade concerns have shifted to Europe.
Major currency revaluations over the past year, with the dollar dropping 30 percent against the yen, appear to have given U.S. manufacturers a hope that they soon will be better able to sell in Japan and compete against the Japanese in the United States and other third-country markets.
Nakasone, moreover, will carry to Camp David a report by a blue-ribbon committee for a basic restructuring of the Japanese economy -- shifting it from one that depends on selling overseas to one that will increase domestic demand. It urges the Japanese to work a five-day week instead of six, save less and consume more, and proposes tax deductions for homeowners and tax cuts to increase the amount of money Japanese can spend.
This plan, which Nakasone insists he and his ruling Liberal Democratic Party will push through, jibes with the current administration preference for redressing the trade imbalance through major changes in the way the Japanese economy works instead of tackling individual issues in expensive, time-consuming and emotionally draining negotiations.
"What's happening here is we are in the middle of a historic change in Japan," said a senior administration official. He added that the report "will be a continuing part of government policy no matter who is prime minister of Japan."
The report, however, has been criticized here and in Japan for its lack of specifics, and the administration is counting on Nakasone to spell out for the president how he intends to implement the plan.
"The United States is not in a position to tell Japan how to implement the changes," said a senior administration official. "But we believe the prime minister is determined to implement these recommendations, and we expect him to outline to the president what he intends to do."
Although the report may sound weak to an American, a State Department official, widely experienced in Japanese affairs, said it comes across "very strong" in Japanese. The Japanese normally are not that direct, he said. "It is very powerful in Japanese terms."
Nonetheless, the senior administration official acknowledged some skepticism in this country over the proposed Japanese economic changes. "Until we really see it put into practice," he said, "people are going to take a wait-and-see attitude."
Meanwhile, he said, a new series of market-opening talks are due to start shortly, the successors to a set of trade negotiations started when Nakasone last visited the United States in January 1985, in a meeting that was dominated by trade topics.
Nakasone instigated the subject of trade at that meeting, which came at a time when he feared that trade frictions were about to explode, and he and the president agreed to a precedent-setting series of talks in four sectors -- telecommunications, sophisticated electronics, forest products and medical equipment and pharmaceuticals.
With some exceptions, they were pronounced a success, and now Japanese and U.S. trade experts are seeking new areas from a list that is believed to include chemicals, processed foods, emerging technologies and wines and liquors. It remains unclear whether any decision will be made in time for an announcement as part of this Reagan-Nakasone round.
There are other pending trade issues that largely will be ignored when the president and the prime minister meet, despite efforts over the past two months to get them settled. As a sign of what appears to be a growing maturity in the relationship, U.S. and Japanese diplomats and trade negotiators realized their leaders could hold a constructive meeting even if there are outstanding frictions.
"The natural instinct is to clear the decks," said a U.S. diplomat. "These meetings put pressures on Japan to get off the dime. There's some validity to use an action-forcing event to put pressure on Japan to cut deals."
The issues were too complex this time, however. "What can be done will be done," a Japanese diplomat said. "But if both sides cannot come to an agreement, it cannot be helped. The negotiations will continue."
The toughest bilateral trade issue involves semiconductors. U.S. manufacturers and the Reagan administration have filed complaints of unfair trade practices against Japanese companies. These include charges, substantiated after preliminary investigations by the Commerce Department, that Japanese companies are dumping sophisticated memory chips at below the cost of production to capture a greater share of the U.S. market. At the same time, the industry has accused Japan of running a government-sanctioned cartel that limits the sale of American-made products.
U.S. Trade Representative Clayton Yeutter has accused the Japanese of "intransigence" in the talks and threatens "very harsh actions" if they don't agree to stop perceived unfair trade practices. President Reagan is expected to echo the importance of the semiconductor issue to Nakasone -- but in far more muted tones than those used by his chief trade negotiators.
The two leaders already have inserted themselves in the midst of another major issue, trans-Pacific airline routes between the United States and Japan.
It started when President Reagan and members of his Cabinet told the Nakasone government that United Air Lines should, under the present airline agreement between the two countries, be allowed to take over the Pan American World Airways routes it had purchased.
Although they objected strongly, the Japanese went along.
Then in a Feb. 4 "Dear Ron" letter signed "Yasu," Nakasone wrote Reagan that the decision caused him "great political difficulties," but was done "in the light of overall Japan-U.S. relations."
In return, he asked that Nippon Cargo Airlines, a new venture, be given added landing rights in the United States. Nakasone called restrictions placed on NCA "a matter of great political concern in Japan" and appealed to Reagan to help.
The administration appears until now to have held firm to the position that NCA can have added flights only if Japan eases its business restrictions on American cargo airlines and allows Flying Tiger Airlines to go from Tokyo to Europe. According to administration officials and airline executives, Japanese negotiators, apparently in the belief that the Nakasone letter to Reagan would carry the day, have refused to discuss those issues.
But just as Nakasone switched Reagan three years ago from beef and citrus to global issues, the Reagan administration is refusing to take up the airline complaints at the presidential level.