Sailing On Warm Trade Winds

By Seiichi Kanise

To the Japanese, Carla Hills had been a steely antagonist making a flurry of merciless demands. But last week their image of the U.S. Trade Representative took an abrupt turn. She became an unexpected defender, thanks to her sudden determination to bring a more conciliatory tone to U.S.-Japan relations. At Hills' urging, President Bush decided last week to remove Japan from a U.S. hit list of countries cited for unfair trade practices. Said Hills, whose new attitude inflamed many hawks in Congress: "Perhaps Japan had the farthest to go, but it moved farther and faster than any of our other trading partners."

The Administration's warm words came with a last-minute accord in which Tokyo pledged to open the Japanese market to increased imports of U.S. wood products. That issue was the last of three conflicts that forced the Administration last year to cite Japan under the so-called Super 301 provision of the 1988 trade law. In the other two categories, Tokyo agreed to buy more U.S. supercomputers and satellites. The Administration has won similar concessions from Brazil, another of the three countries named on last year's hit list; only India will be named again.

Some legislators accused Bush of going soft on Japan. Senate Democrat Lloyd Bentsen called the decision a "serious mistake" that could "poison the well," meaning Congress might be less likely to approve the Administration's future trade agreements with Eastern Europe and new rules being negotiated in the General Agreement on Tariffs and Trade. House majority leader Richard Gephardt was just as opposed: "At the very moment when we're beginning to see signs of tangible progress, the Administration seems to be saying it's time to back up and back off."

Bush has been torn between appeasing Congress and rewarding Prime Minister Toshiki Kaifu for Japan's newfound flexibility. Just two months ago, U.S. negotiators came out of trade talks in Tokyo angry and frustrated. But seven hours of meetings between Bush and Kaifu last March in California, more talking time than any previous U.S.-Japan summit, were a watershed. Shortly afterward came a flurry of agreements, including a pact on far-reaching structural reforms. Among other changes, Tokyo promised to ease restrictions on opening large department stores and to impose tougher penalties for protectionist bid-rigging schemes.

In Tokyo the warm trade winds have brought on a mood of relief. The two countries still have many points of friction over a range of products, from auto parts to semiconductors, and the U.S. trade deficit with Japan remains stuck at a hefty $50 billion. But the ominous phrase trade war, so ubiquitous only two months ago, no longer seems appropriate at a time when Carla Hills suddenly has so many admirers in Tokyo.

With reporting by Gisela Bolte/Washington and Barry Hillenbrand/Tokyo