TOKYO, JUNE 2 -- For most of the past decade, through trade dispute after trade dispute, Japan and the United States could always agree on one thing: Japan's trade surplus was bad.
Now, in a radical shift with profound implications for U.S.-Japan relations, the Japanese government appears to be moving away from that orthodoxy. This past week, two key members of Prime Minister Toshiki Kaifu's cabinet and a government commission both argued that Japan's surplus may, in fact, be good because it leaves Japan with extra funds to lend to Eastern Europe, the developing world and the United States.
Japan's surplus has fallen significantly, said Hideyuki Aizawa, chief of the Economic Planning Agency, "and I don't see any reason to bring it down further." Aizawa's comments were reported by Japanese journalists traveling with him in Europe.
The new approach appears to contradict a long-standing understanding, restated earlier this year by Kaifu and President Bush, that both countries should do whatever necessary to reduce their bilateral trade imbalance, which totaled $45 billion last year. The two nations are in the midst of arduous negotiations aimed at revamping their economic and social structures to ease the imbalance.
Kaifu has not endorsed his economic advisers' new philosophy, and a Foreign Ministry spokeswoman said today that Japan remains committed to reducing its surplus. "In spite of all this, our basic position hasn't changed, which is to make every effort to rectify the trade imbalance, and at the same time to make international contributions" to Eastern Europe and the world's poorer nations, spokeswoman Kumiko Saeki said.
But the shift by top-ranking officials has caused "quite a bit of surprise" in the U.S. Embassy here, a U.S. official said. Comments by Kaifu's ministers "seem to be going in the opposite direction" of Japan's recent promises in the negotiations, the official added.
On Friday, Finance Minister Ryutaro Hashimoto provided a somewhat more cautious restatement of the new approach, saying that Japan should still try to reduce its surplus, at least for now, but should also study what level of surplus might be appropriate.
The comments by Aizawa and Hashimoto followed a report by a government advisory council chaired by former finance vice minister Tomomitsu Ohba. The report said Japan should evaluate its surplus more positively because of two important developments: the surplus has gotten smaller, and world demand for capital has increased.
Japan's surplus has declined from 4.5 percent of its gross national product in 1986 to about 2 percent now. At the same time, formerly Communist countries in Eastern Europe need huge injections of capital, economists say, aggravating what many believed to be an already inadequate savings rate in the developed world outside Japan. Ohba said he believes the current level of surplus is appropriate.
But $45 billion of Japan's $64 billion trade surplus last year was with the United States, and many Americans believe it reflects differences in economic systems that put U.S. companies at an unfair disadvantage in trade with Japan. Congress has urged the Bush administration to press Japan more forcefully to reduce its deficit.
In Paris this past week, U.S. Treasury Secretary Nicholas F. Brady was reported to have acknowledged the need for increased capital for Eastern Europe. But that need, he said, "should not be confused with the need for surplus countries to continue to bring down their external surpluses."