IN THE SEMI-QUOTAS now imposed on their automobile exports to the United States, the Japanese have an example of the curious Occidental custom known as saving face. The Japanese automobile manufacturers, a tough and pragmatic crowd, will probably have difficulty understanding it. But in Washington they are dealing with a highly traditional society in which this kind of symbol and gesture is very important. The Japanese will have to get used to the inscrutable West.
President Reagan stands for free trade and open markets. But he also stands for assistance to the American automobile industry. What was he to do? He discreetly suggested to the Japanese government that it might want to rescue him from this dilemma by putting a rein on its automobile industry. The Japanese government, which does not have reliable control over automobile exports, was not eager. Many Americans in official postions then sharpened Japanese attention by suggesting that Congress was about to pass legislation of a ferocity and vengefulness hardly to be described in cold print. The Japanese sighed. Mr. Reagan's trade representative, Mr. Brock, was dispatched to Tokyo, preceded by indications from highly placed sources that a man of such eminence could not possibly be allowed to return empty-handed. After a good deal of fencing, he succeeded in achieving an agreement.
The Japanese promise to limit their cars sent to the United States during the coming year to 1,680,000. Some people consider that just about the number that they might have been able to sell without the limitation. Others think that it may be several percentage points lower. With this interesting concession sercurely in hand, Mr. Brock returns in triumph, and the prospect of protectionist legislation fades in Congress.
How much actual difference will it all make? The agreement itself is, first of all, a wretched precedent. At the least, it provides an example to which the American autombile industry will keep returning in the difficult years ahead.
As for the actual economic cost, that will depend on the demand for Japanese cars and whether it begins bumping against the limit. There will be a simple way to tell whether that's happening. You will know that the import limits are biting if prices upward faster than in the past. If car prices don't accelerate, it means that the limits are having no effect on the market.
That's why the whole controversy has been not only embarrassing but dangerous to the Reagan administration. The central purpose of its economic program is to bring down the inflation rate. Import protection isn't very effective in preserving jobs or stimulating investment. But there's one thing that it does with absolute certainty, and that is to raise prices.
The administration seems to have reasoned that it could afford to make an exception here on grounds that the automobile industry is special case. But is it? Last week's special case was grain and the lifting of the Soviet embargo -- another decision signaling higher prices at home and, incidentally, carrying certain implications for security policy abroad. Speaking of security policy, Japan's prime minister, Mr. Suzuki, will arrive this week for talks on, among other things, defense. Since he has cooperated generously in this exercise in face-saving, Mr. Reagan will have some difficulty pressing him very severely for a greater contribution to Pacific defense -- which would be, for the Japanese government, a far more expensive proposition.