Tue, 11 Oct 1994

No U.S.-Japan trade war

What is most important about the recent trade agreement between the United States and Japan is not what happened but what didn't. The United States and Japan decided not to start a big trade war. They decided to leave key issues open for future negotiations.

There were some important concessions from Japan that will open the country to more American products in areas such as telecommunications, glass, medical equipment and insurance. The Clinton administration will fairly count these as victories. But battles over the sector that accounts for two-thirds of Japan's trade surplus with America -- in autos and auto parts -- were left to be fought over another day, which is good news for Japan.

The agreement does not provide for explicit numerical goals to measure greater Japanese openness to American products, a victory that Japan won some time ago. But the administration will crow about language calling for "a significant increase in access and sales" for American goods.

Some who sought a hard American line against Japan will say that the Clinton administration blinked. But the administration has its eye on some large issues, both economic and political. The central economic fact is that the United States has an interest in the economic recovery now under way in Europe and wants an economic recovery in Japan. A trade war would unsettle or reverse a movement toward growth that will benefit American exporters and American workers. The administration also cared about the financial and currency markets and knew that a trade war would unsettle them, too.

-- The Washington Post