When U.S. trade representative Bill Brock triumphantly announced from Tokyo a supposedly voluntary limit on Japanese auto imports, the credit -- or the blame -- for the action was shared by Brock, Secretary of Transportation Andrew Lewis and Secretary of State Alexander M. Haig Jr.
But though his fingerprints were nowhere visible on the agreement, White House counselor Edwin Meese III was an important architect of the delicately negotiated compromise. It enabled President Reagan to carry out a campaign promise of helping the auto industry while simultaneously declaring that he remained committed to free trade. And, as on so many issues that have arisen early in the Reagan administration, Meese acted in concert with his White House partner, chief of staff James A. Baker III.
As a case study of decision-making in the new administration, the auto-imports controversy illustrates the subtle methods of powerful figures like Meese and also the chaotic public dialogue that can result when strong-minded Cabinet members disagree. Whether it was a wise compromise or a clumsy one, the Reagan White House tried to piece together an outcome which would let the free traders, who lost, walk away without humiliation and the auto industry supporters, who won, walk away without total victory.
Some of the positions Reagan brought with him to the White House were well-known and unequivocal. For example, those close to the president said from the first that he would find a way to lift the Soviet grain embargo at the first opportunity.
Other issues were more complex, and the new president's position less clear. Reagan faced an especially nettlesome problem, partly of his own making, on the auto industry's politically sensitive demands for mandatory reduction in the number of Japanese cars allowed into the United States. Last year 1.9 million Japanese cars were sold in the United States.
Reagan has been a free-trader all his life. Although his views on most issues have changed from the days when he was a liberal Democrat, Reagan accepts what is essentially a New Deal critique of tariff policies that helped produce the Depression.
In this view, restrictive tariffs severely reduced international trade and left producers without markets for their goods. Over the years, Reagan has consistently opposed protective tarriffs, and he was critical of Republican rival John B. Connally for advocating them during the 1980 primaries.
But in the fall election campaign, with unemployment worsening in politically strategic Michigan, Reagan strayed from the free-trade faith. Campaigning in a Chrysler K-car plant in Detroit on Sept. 2, 1980, Reagan made a planned departure from his prepared text.
"There is a place where government can be legitimately involved -- and this is where I think government has a role it has shirked so far -- and that is to convince the Japanese one way or another, and in their own best interest, the deluge of cars into the United States must be slowed while our industry gets back on its feet," Reagan said.
Reagan carried Michigan in his landslide victory two months later. He picked an economic team -- Office of Management and Budget Director David A. Stockman, Treasury Secretary Donald T. Regan and Council of Economic Advisers Chairman Murray Weidenbaum -- unanimously committed to free trade. Stockman, in particular, warned that auto import quotas would undermine the president's economic program by increasing the price of cars and adding to inflation.Import quotas also had the potential to touch off a tariff war that would increase the prices of other goods.
On the other side, there was clamor for relief from Michigan Gov.William G. Milliken and from the state's congressional delegation (except for Rep. Stockman, who resigned his House seat to become OMB director). And there was political support for this view in the president's Cabinet, particularly from Lewis, who during the campaign had been the chief Reagan operative at the Republican National Committee.
Lewis, perhaps the most politically skilled member of the Reagan Cabinet, organized his department quickly. He wanted to proceed on the auto import issue and he sought out Meese. Without ever publicly committing himself to a course of action, counselor Meese went to work, recognizing that the president had a made a political commitment which he would want to honor. His first response was to recommend a task force, as he was used to doing when he was Gov. Reagan's executive secretary in California.
Within a week of his inauguration, the president had appointed a task force to study the auto imports issue. To the surprise of some of the free-trade purists, he accepted Meese's recommendation and named Lewis the chairman, even though the transportation secretary would clearly speak up for the domestic industry's viewpoint. Later, a high administration official would say that the president had "named the fox to guard the chicken coop."
Lewis moved aggressively to mobilize support for auto import limitations. He had a lot of support from midwestern governors, led by Milliken, and had allies in the Cabinet -- Secretary of Commerce Malcolm Baldrige, Secretary of Labor Raymond J. Donovan and, later, Brock and Haig. But his strongest leverage came from Capitol Hill, where Sen. John C. Danforth (R-Mo.) had introduced legislation that would impose an annual quota of 1.6 million auto imports from Japan.
On Feb. 18, in Detroit, Lewis sounded the battle cry when he met with representatives of the Big Three automakers and the United Auto Workers union and announced, "The level of Japanese imports is unacceptable."
What followed, during the next three months, was a process which Baldrige has described as a "foursided Kabuki dance." Other administration officials, picking up the cultural theme, have suggested that the U.S. government leaders behaved like inscrutable Americans.
The process is the kind in which Meese can be discreetly influential because he understands what Reagan wants and how the president's mind works. Essentially, the president was trying to give some help to the domestic auto industry without blatantly abandoning his commitment to free trade or touching off a tariff battle with the Japanese.
To reconcile these conflicting objectives, it was essential to have the Japanese "voluntarily" decide to limit auto imports without giving a public appearance that the United States had applied pressure. This would be a face-saving solution for the president, who could then announce that he opposed protective quotas and would veto legislation establishing them. It would be face-saving for the Japanese as well, giving them an opportunity to announce that they were helping an ally restore its economic house.
There never was any doubt in the high councils of the White House that the Japanese knew what the United States wanted. While Brock, in his final negotiations, was instructed not to tell the Japanese the number to which the United States wanted imports reduced. Brock could invoke the useful example of the Danforth bill.
There has never been any indication that Danforth had the votes to get his bill through the Senate, much less the Democratic House, but it served a useful purpose. A high White House official called it "manna from heaven" for preserving the president's tricky position. The official put it bluntly; the Danforth bill allowed Reagan to "cover his free trade ass."
But it is not strictly true that the administration succeeded in avoiding diplomatic pressure tactics. Two incidents -- one of them publicized and the other kept from public view -- demonstrate that the administration did invoke specific goals for reduced imports.
The publicized incident came when Haig, in one of those turf battles which flared up frequently in the early months of the administration, for a short time took over the negotiations from Brock. He instructed Ambassador Mike Mansfield to discuss the issue with the Japanese and mention both the Danforth bill and a range of numbers. Then, Haig met for 3 1/2 hours with then-foreign minister Massayoshi Ito, making the U.S. case so forcefully that Ito said afterward he had not realized that Haig was involved in auto negotiations.
The unpublicized incident occurred in a meeting in the Oval Office on March 19, the third and last of the president's meetings with his auto task force. In two other such meetings and in numerous ones among task force members, the free traders and the advocates of restrictions, who called themselves "pragmatists," had argued back and forth. There had been one clash between Regan and Lewis in the president's presence, with the treasury secretary saying that the auto industry would make $4 billion in proits next year without quotas, and Lewis calling Regan's figures "ridiculous."
All along, in meetings and telephone conversations, Meese had encouraged the task force. In that March 19 meeting in the Oval Office, after Reagan had been told by Meese and Baker, and again by Brock, that the Japanese were ready to act before the May visit of Prime Minister Zenko Suzuki to Washington, the president agreed with the course of action recommended to him.
That decision was to press for what were euphemistrically called "voluntary restraints."
The decision was never announced to the press. Instead, press secretary James S. Brady was sent out to announce the elimination of government regulations on the auto industry, an action that was noncontroversial within the task force.
Six days after Brady made this announcement in the White House press room, he was severely wounded in the assassination attempt on the president.
While Reagan spent a month recuperating, Meese and Baker kept the decision on track. Brock had a standing invitation to visit Japan, but the timing had to be right, the moment when the Japanese were anxious to conclude matters before the Suzuki visit. The public negotation must not seem to be a negotiation at all, but the announcement when it came, must clearly reduce the level of auto imports.
Meese and Baker stayed with it. They and Meese depty Craig L. Fuller met again with Lewis on April 2 in Meese's office. Meese talked again to Brock, who understood the delicacy of the "non-negotiatioin."
When the announcement from the Japanese finally came on May l, it was Brock who was given the credit. Back home, Lewis also won political plaudits from the auto industry. From the point of view of those who favored some limitation of Japanese imports, these plaudits for both men were deserved. But it was a solution made possible by, as much as anything, the behind-the-scenes efforts of White House counselor Meese.