Recent statements in Washington and Tokyo appear to presage a new round of acrimonious trade conflict between Japan and the United States. Heated debate is becoming an almost annual occurrence, eroding the good will and the ability to cooperate between the two largest market economies.
Suspension of negotiations in Hawaii in October over Japan's argricultural quotas, especially for beef and citrus fruits, illustrates some mistakes both sides have been making. Neither beef nor citrus is a "big ticket" item in the overall Japan-U.S. trade balance, but they are symbolically important to both countries. To Americans, they are a visible market barrier, and symbolic of what they regard as an unwillingness of the Japanese to take politically courageous acts to make their market as open as the American market. To the Japanese farmer organizations, they are symbolic of the willingness of the Japanese government to protect the welfare of Japan's farming community, which sees itself under increasing siege from much cheaper foreign imports.
In this context, the impasse that developed in Honolulu is perhaps understandable. The Japanese side offered little hope of further liberalization, while the American side demanded full liberalization. The meeting broke up a day early with the Japanese righteously and rightfully complaining that the Americans had not been willing even to discuss Japan's proposals for liberalization of other agricultural barriers and with the Americans righteously and rightfully complaining that Japan had not abided by the spirit of earlier commitments to take further significant steps toward liberalization. Moreover, there was a natural tendency for negotiators on both sides to exaggerate the intransigence of the other side to the press and politicans back home, creating the impression of an even more dismal and acrimonious confrontation than really took place.
What were some of the mistakes that led to this situation?
First, on the American initiative, the talks were held earlier than originally scheduled. Neither side, but particularly the Japanese side, had done the kind of serious exploration of options back home or with each other that could lead to compromises productive of results.
Second, the meeting was billed as significant, creating high expectations and inviting considerable press attention. In fact, this should have been a quiet, low-level exploratory meeting. Too much attention at an early stage in negotiations tends to harden positions and complicate negotiations.
Third, neither side took carefully enough into consideration the interests of and constraints upon the other party. The Japanese side should have been aware that acceptance of an apparent backing away from an earlier, more forthcoming posture would have been impossible for American negotiators to defend at home to Congress and the interest groups involved. The Americans should have been aware that a demand for full liberalization, however desirable in the long term, raises the specter to Japanese farmers of being totally wiped out, increasing the farmers' pressures on the negotiators not to make concessions.
Finally, Japan did not have an effective program of agricultural diversification for citrus and beef products during the past four years. As a result, the bargaining leverage of its negotiators was reduced and put them in the untenable position of making excuses for not taking actions that the American side expected.
What can we learn from this experience?
First of all, both sides need to adjust their bargaining strategies. In the past, Japanese negotiators at times invited public American pressures, while Americans believed only very strong pressures could lead to results. But such tactics today prove counterproductive. What is needed now is a quiet exploring of options and then face-to-face negotiations by high-level negotiators once it is clear that there can be successful results. The previous round of citrus and beef negotiations in 1977 and 1978 was ultimately handled effectively in this manner by Robert Strauss, then U.S. special trade representative, by Japanese Agriculture Minister Nakagawa and myself.
Similarly, today high-level political leadership is needed to strike a balance between the positions of the two sides and to launch Japan on an effective program of structural adjustment.
Second, both sides should seek to work out compromises without excessive politicization or rancor, a process that is often difficult for countries that are democratic and that have highly organized interest groups and free media. If it appears that a bilateral solution cannot be reached without serious abrasion of the relationship, as a last step, negotiators should consider using the GATT dispute settlement mechanism in hopes that a disinterested third party could help the two sides persuade their respective governments that compromises are necessary and appropriate. However, reference to the GATT should not be an excuse to delay needed structural adjustments in Japan.
Finally, both sides need to act in good faith to implement the agreements that have been reached. Too often discontented elements at home are at work to undermine the compromises or to rekindle the debate. It is the responsibility of both governments to abide by their commitments and to contain those who for shorter-term economic or political interests prefer impasse or confrontation.