"It's no fun when one of the players in a card game wins no matter what cards the others hold. Our reaction is to want to eject that one player from the game."
That was the plaintive British reaction when Masumi Esaki, a Japanese government representative, tried to ease what the Japanese call "tensions" over trade. This hoary poker players' lament sums up the growing frustration here and in Europe over Japan's extraordinary export success in everything from video games to automobiles.
In the course of running up an $18 billion trade surplus with this country and $11 billion with Europe last year, the Japanese have convinced many workers and politicians that they are being unfair.
Fairness, of course, has only a little to do with it. Japan will continue to run a large surplus so long as the yen is undervalued (mostly because of high American interest rates) and while Japanese companies maintain an advantage in productivity and relative wage rates. According to a new forecast by Chase Econometrics, Japan will continue to outpace Western Europe and the United States for the next 10 years, especially in computers, office machinery and industrial robots. Chase predicts that Japan's total exports will grow 214 percent in real terms in the 1980s.
In a speech a few days ago in Hong Kong, Deputy Treasury Secretary R. T. McNamar assured his audience that the Reagan administration will resist calls for retaliation, "as appealing as retaliation appears." Nonetheless, a high Commerce Department official privately advises colleagues that the best way to deal with Japan is to set market-penetration limits on a host of industrial items, and then say: "This is it--and no more."
For example, he would limit the Japanese to a quota of 50 percent of the market for 64K RAMs--the state- of-the-art semiconductor memory-- against the 70 to 80 percent share they've achieved. (Imagine the reaction if Europe took a similar stand against American companies' high-tech sales there!)
The Japanese are getting impatient with what they consider a hawkish harangue to make more concessions. In a recent Japanese newspaper article, former ambassador to Washington Takeshi Yasukawa said that criticism of Japan brings to mind an old Japanese saying:
"When you hate a monk, you hate his very surplice."
The hostility is bound to intensify. Despite a theoretical commitment to a multilateral trading system, the dispute over Japan's bilateral trade surpluses threatens to boil over at the June economic summit in Paris, with the depressed European countries leading the demand for increased access to Japan's home market.
The United States, mindful of its own large bilateral surplus with Europe, will do its best to defuse the issue, at least publicly. But behind the scenes it keeps the pressure on the Suzuki government.
In a thoughtful letter to me, Ambassador Yasukawa reflects the deep resentment in Japan over a recent comment by Commerce Secretary Malcolm Baldrige to the effect that Japan must make changes in its culture, so as to make its markets more receptive to foreign goods. Yasukawa retorts that perhaps greater changes are required on the U.S. side to boost productivity, and match Japanese quality.
He's right on both issues. Nonetheless, Japan cannot just sit by while its globally important "special relationship" with the United States visibly deteriorates.
Yasukawa concedes that Japan over-protects agriculture--an area where U.S. productivity does excel. And in the view of former Undersecretary of State Richard Cooper, Japanese authorities could take the important symbolic step of directing their trading companies to boost imports of "a couple of dozen" products manufactured here and in Western Europe.
What the Japanese authorities have failed to understand is that even their free-trade friends and allies have lately adjusted their thinking as a consequence of the import avalanche. For example, Borg-Warner Chairman James F. Bere recently said in a widely quoted speech to the Chicago Foreign Trade Council that the U.S. auto industry is in such bad shape that without "at least short- term protection, large parts of it might not survive." Bere, who is also chairman of the Advisory Council on Japan-U.S. Economic Relations, urged Japanese auto companies to increase their investment here, or accept a major American-produced content in their cars.
To the Japanese, some of these demands seem unreasonable, because the general economic malaise is Made in America, not Made in Japan. But like the big winner at the poker table, Japan has to deal with perceptions as well as reality.