The Happy Deficit

Japan is one of the few countries where red ink on international ledgers brings smiles; for years the nation has run positively embarrassing surpluses that have drawn angry criticism from its trading partners. Now, both embarrassment and anger are fading. For the first time in years, Japan is running a significant deficit in its balance of payments, and its lopsided trade surplus with the U.S. -- which has sorely strained relations between the two countries -- is diminishing. Says William D. Eberle, the demanding chief U.S. trade negotiator with Japan: "The trade imbalance ap pears to have peaked and is beginning to go down." By happy coincidence Washington reported last week that in April the U.S. showed its first trade sur plus in 18 months.

Though it is too early to view the trend as established, the signs are en couraging. In the first quarter of 1973, Japan took in $803 million less from other countries than its citizens spent or lent abroad. In April, it posted a record monthly payments deficit of $1.1 billion. Key reasons: a surge in Japanese bank loans to foreigners and a sharp increase in overseas investment by Japanese businessmen, both occurring with government approval. Another important reason was the lessening of Japan's trade surplus with the U.S., its chief market for exports and supplier of imports. During the first four months of this year, the gap has averaged $45 million a month, less than one-third of the 1972 average of $159 million for this same period. In April, Japan's sales to the U.S. were about the same as a year earlier, but its American imports soared 43%. Though grains, lumber, coal and other raw materials continue to make up the bulk of U.S. sales to Japan, more American consumer goods are turning up in Japanese stores. They include Wilson golf clubs, Levi's jeans and Maidenform bras.

Last week Finance Minister Kiichi Aichi predicted that Japan's trading account with the U.S. would actually slip into the red in May and stay there for several months. That may be an overstatement, but Japanese businessmen and politicians now predict that the trade surplus with the U.S. this year will drop to less than $2.5 billion, from $4.2 billion in 1972. Deliberate government policies to restrain exports and dismantle Japan's once awesome array of protectionist restrictions on foreign goods are obviously having an effect. So, too, is the sharp rise in the value of the yen against the dollar since late 1971, which has made Japanese goods more expensive for Americans and U.S. products cheaper for Japanese.

There is still some danger of a reversal of the reversal. Japanese say that their U.S. sales of cars, TV sets and other goods are dropping--but add that a substantial jump in U.S. inflation could make even the high prices of Japanese goods seem attractive again to Americans. On the other side, rapid growth in the Japanese economy has helped fuel demand for U.S. products, but the Tokyo government last month moved to reduce Japanese inflation by slowing that growth. Among other things, it tightened curbs on credit. Even so, the fears of many American and other foreign businessmen that Japan would go on endlessly disrupting world trade patterns by sucking in ever-growing amounts of money from other countries clearly need a reassessment.

This file is automatically generated by a robot program, so reader's discretion is required.