Now that Washington has decided to revive the controversial “Super 301” procedure, Japan should start market-opening discussions with the U.S. to prevent trade conflicts, according to Glen S. Fukushima, a former deputy assistant U.S. trade representative for Japan and China.
The Japanese should not become emotional over last week’s revival of Super 301 because the provision is a “natural part” of U.S. trade policy and not intended to target Japan exclusively, said Fukushima, president of the American Chamber of Commerce in Japan.
But Japan should be aware of high U.S. expectations that the world’s second-largest economy will open its markets to imports, he said. “I hope that the U.S. and Japan will sit down and talk about some of the areas of sensitivity,” he said in an interview with The Japan Times.
These areas include rice, steel and insurance, but Fukushima said many other sectors are also important. “The American business community involved with the United States and Japan would rather see these issues resolved in a businesslike, professional manner, as opposed to having a Super 301 case or World Trade Organization case, which could result in resentment and distorted media reports,” he said.
Fukushima served at the USTR office between 1985 and 1990 during the administrations of Ronald Reagan and George Bush. In addition to his current ACCJ post, he also heads the business consultancy Arthur D. Little (Japan), Inc.
The Super 301 procedure will begin March 31 when the U.S. Trade Representative releases a National Trade Estimate Report providing a country-by-country review of trade barriers faced by U.S. exporters. A month later the government will release a list of targeted countries, possibly including Japan, with which it will begin 90 days of intense negotiations.
If the talks do not produce agreements, Washington may end up imposing trade sanctions a year later.
Many people — not only those outside the U.S. but some free-trade advocates within the U.S. — view these forced negotiations as American bullying. They consider Super 301 as running counter to the multilateral trade regime of the Geneva-based WTO. But Fukushima defends the legitimacy and effectiveness of Super 301 to open foreign markets.
If the WTO can remedy a trade conflict, the U.S. should take its claims to the world body, Fukushima said, but if there is not, the U.S. should pursue its claims on a bilateral basis.
He acknowledged it can become a problem if the U.S. actually imposes unilateral tariffs on foreign countries, which may in turn take the issue to the WTO for settlement. But there is a long process of negotiations before sanctions are imposed, if at all, he stressed.
According to the Super 301 procedure, sanctions could be imposed after July 2000, or 18 months from now. “I think at this point it is premature to say that it will create a problem in the WTO,” he said.
Besides, Super 301 has a positive effect in that it can help dampen protectionist pressure in the U.S., he said.
Fukushima attributed the mounting protectionist pressure to the country’s surging trade deficit, a flood of imports resulting in rising unemployment in some industries and perceived insufficient liberalization in foreign markets.
The 19-month-old global financial crisis affecting Asia, Russia and parts of Latin America have led to shrinking American exports and to a deluge of imports into the still-booming U.S. market, a situation noted last week by U.S. Trade Representative Charlene Barshefsky in testimony before a Senate committee. Fukushima’s advice to U.S. officials is that they take care not to make remarks that could cause “unnecessary resentment” in Japan.
In 1993 and 1994, Fukushima had opportunities to closely watch the bilateral trade dispute in Washington D.C. Some U.S. government officials were making blanket statements demanding a result-oriented approach toward Japan, but that approach was not necessary in all sectors, he said. “Because of the imprecise nature of U.S. requests and because the mass media often distorted and exaggerated this, it ended up being a theological war, a philosophical battle between the United States and Japan,” he recalled.
With Super 301 in place, the Clinton administration’s policy toward Japan appears to be entering its fourth stage, he indicated.
In the 1993-1995 period, the administration focused on trade negotiations to open Japanese markets. From 1996 to 1997, the focus shifted to security issues such as the North Korean nuclear problem, U.S. bases on Okinawa and the Japan-U.S. defense cooperation guidelines. From 1998, Japan’s macroeconomic policy was a major concern because of the continuing economic slump and its impact on Asia and the world economy, according to Fukushima.
“In 1999, I think we will see U.S. attention on all these issues,” he said.