The new administration of George W. Bush has placed low priority on trade policy toward Japan, making it crucial that Tokyo take the initiative in developing closer trans-Pacific economic ties rather than waiting for overtures from Washington, a U.S. think tank member told a symposium held just before the presidential inauguration.
It is widely believed that the Bush administration will focus on defense and security in the alliance with Japan, and many experts warn that economic relations could take the back seat.
“We stand at a critical juncture in the U.S.-Japan trade relationship. We should not miss the opportunity to pursue a new, positive vision for the alliance,” Bruce Stokes, a senior fellow at the Washington-based Council on Foreign Relations who recently advocated a free-trade agreement between the two countries, said in the “Think Tankers’ Reunion” symposium organized by Keizai Koho Center.
In his analysis of the inner operation of the new administration, Stokes said new U.S. Trade Representative Robert Zoellick may face an uphill battle gaining the president’s ear as many members of the Bush team want to make trade subservient to foreign policy — a factor that may cloud White House decisions on trade issues.
Stokes described Zoellick, who has years of experience in the past Republican administrations of Ronald Reagan and George Bush, as a “creative, strategic thinker” with the power to bend bureaucracy at his will.
His personal connections with key trade players around the globe would enhance his deal-making ability, and his hawkish foreign policy views, which he shares with Vice President Dick Cheney, Secretary of State Colin Powell, Secretary of Defense Don Rumsfeld and National Security Adviser Condoleezza Rice, would make his relations with them easy.
‘Not part of inner circle’
Still, Zoellick may lack clout in the Oval Office because he is “not part of the Bush inner circle,” which even initially tried to deny Cabinet status to the USTR, Stokes said. Moreover, the presence of Don Evans, one of Bush’s closest friends, as commerce secretary could complicate matters for Zoellick, he added.
The USTR not having the president’s ear — as was the case during the last four years of the Clinton administration — could lead to trade policy misjudgments by the White House, Stokes said, citing decisions made on deals for China’s entry to the World Trade Organization.
According to Stokes, high on the new president’s priorities for foreign economic relations are the Free Trade in the Americas initiative, reflecting his affinity with Latin America as former governor of Texas, the fast-track trade negotiating authority and a host of bilateral problems with Europe.
Bush will also have to finish off China’s accession to the WTO — failure of which could create some problems for his administration because if China is not a WTO member by June, the U.S. Congress must again vote for an annual renewal of most favored nation status for China, he added.
But Trade itself may not be high on the overall Bush policy agenda in a worsening political and economic climate, he said. “The public will be wary of new trade deals” if unemployment rises due to the U.S. economic slowdown, he added.
Also, Zoellick may get little support from his natural allies — the business community — which is calling for tax cuts and deregulation and has placed trade very low on its priority list.
Stokes predicted that Bush advisers will be telling the president to focus his limited political capital — left for him after his narrow victory over Al Gore, who won more popular votes than Bush — on popular measures like tax cuts, not on issues like trade.
“Trade policy toward Japan will initially be a very low priority,” Stokes said. The Bush foreign policy team is putting the emphasis in relations with Japan on strategic and diplomatic concerns, and “I don’t think they want minor economic issues to stand in the way,” he added.
The new administration will not push hard on ongoing issues such as autos, telecommunications and flat glass because “fights (with Japan) over these issues are what they criticized the Clinton administration for,” he predicted.
Still, with a $74 billion trade imbalance, “there is always the potential” for individual issues to arise, he warned.
“Under the Reagan and Bush administrations, we had significant bilateral trade problems because the U.S. business community complained when they thought their interests were affected adversely by Japan,” he said. “Don’t forget, most steel industry CEOs are Republicans. . . . They will have direct access to the president and will be heard.”
Stokes lauded efforts by Japan, initiated by the Economy, Trade and Industry Ministry, the Foreign Ministry and others, to craft a new bilateral economic initiative that it hopes to present to the Bush administration by spring.
“It is tremendously important that such an initiative come from Tokyo — because given Japanese public resentment toward ‘gaiatsu,’ it has to come from Tokyo to be credible, and because given U.S. distraction with Latin America, China and Europe and Washington trade policy community’s frustration in dealing with Japan, such an effort would be unlikely to come from the Bush administration,” he said.
More ambitious initiatives
But Stokes also said the Japanese initiatives should be more ambitious in their agenda because “the chance to recast bilateral trade dialogue comes once every four or eight years at the turn of the new U.S. administration.” Tokyo should at least make it clear it is ready for an open-ended dialogue “that could lead to more ambitious agenda as time goes on,” he added.
He called for a “bold, new joint project to accelerate the integration of our two economies,” which would “reaffirm the primacy of (the Japan-U.S.) relationship, provide a new, forward-looking rationale for the alliance, and provide a framework to deal with inevitable, troubling bilateral trade problems in a setting that contains them so that they do not threaten the broader relationship.”
In the same session, Tomohiko Taniguchi, a senior Nikkei Business writer, warned that Japan’s failure to live up to the Bush administration’s high expectations on Tokyo could have serious and long-lasting consequences for bilateral ties.
The Bush team’s view toward Japan is quite different from that of the Clinton administration, whose members tended to dismiss Tokyo as an “outlier,” Taniguchi said, noting that the new president’s hopes for closer ties with Japan derives from his policy of putting diplomatic and strategic concerns over trade.
But if Washington again becomes disappointed in Japan as an unreliable partner from that perspective, the result will be much more serious than friction over trade, he added. “The Japan-U.S. alliance itself could lose its meaning.”
Since the 1972 reversion of Okinawa, Japan has tended to look only at trade relations in dealing with the U.S., but that must change, Taniguchi said.
“It is all the more important that our perspective go beyond trade and expand into the realms of politics, security, regional studies and technological cooperation,” he added.
A high-profile report on Japan-U.S. relations by a group led by Richard Armitage, calls on Japan to take part in collective defense arrangements, and most of the group wants Japan to amend war-renouncing Article 9 of its Constitution, Taniguchi said.
What has troubled the group’s members, he noted, is that they were at a loss who to talk to in Japan — who to present their views for a trans-Pacific policy discussions. This illustrates how Japan and the U.S. have neglected to foster such channels of communication, he added.
Taniguchi stressed that Japan must give up its passive view of the world.
“When Japan-U.S. relations are discussed in this country, the frequent question that comes up is ‘what the U.S. will do about Japan, or what policies will it take?’ Here we are assuming that the subject is always the U.S. and Japan is the object,” he said. “We have to start by changing such way of thinking.”
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