Japan-bashing leaves a dent in Clinton's image

SENATOR Bill Bradley rebuked President Bill Clinton publicly last week for 'inept' handling of the Japanese, which he said was motivated by purely domestic politics.

It was an important political statement for several reasons. Mr Bradley, of New Jersey, is one of Mr Clinton's most reliable supporters, a fellow Rhodes scholar who declined to challenge him for the presidential nomination two years ago; he is one of the few Japan experts in the US Senate, and as such is heeded by his colleagues; his remarks signal a budding war within the Democratic Party, between the 'investment bankers' in the administration and the more strategic thinkers who want a long-term policy for Asia.

What motivated Mr Bradley to deliver such an unusual public statement? Those close to him say it grew out of genuine concern that the administration's hard-line policy is jeopardising long-term US strategic and economic interests. Furthermore, Mr Bradley believes that this is happening for all the wrong reasons, to placate domestic constituencies that could be influential in this year's mid-term elections.

'This is Japan-bashing for the domestic constituency, without regard to the broader picture and without even achieving the short-term objective, which is to get the bilateral trade deficit down,' he said in an interview with the New York Times.

Interestingly, Mr Bradley is not perceived as a 'wet' on Japan but as a leader of a new breed of US policy makers, who believe that America has an obligation to foster the reform process in Japan. This would be just one link in a broader, over- arching policy on Asia on which the US should concentrate its foreign policy. Since the showdown between Mr Clinton and the Japanese Prime Minister, Morihiro Hosokawa, this group has become increasingly vocal in its criticism of US foreign policy.

Critics believe that the US came away from the failed White House meeting looking like 'bullies' and 'protectionists' while Japan championed the cause of free trade in Asia. 'We have become the country that is pushing for that which is clearly not seen as in the interests of other Asian countries, which is where most of the growth and jobs in the US are going to be created over the next decade,' Mr Bradley said.

The difficulty now is how to get out of this mess without igniting a full-scale trade war, the first really big confrontation of the post-Cold War period. Mr Hosokawa made it very clear that he could not be seen to be bowing to US pressure for 'quantifiable' indicators or for market-opening targets on a sectoral basis. He sent an army of emissaries to Washington prior to his visit, to deliver the message that he would launch market-opening measures of his own design if he survived his current political crisis.

But Mr Clinton's Japan team, dominated by Roger Altman, assistant Treasury secretary, Robert Rubin of the White House and Joan Spero at the State Department, refused to listen, over the objections of top State Department officials.

All three, in their former careers in the private sector, had battled to gain market share in Japan. In their strategy sessions with Mr Clinton, to which the Secretary of State, Warren Christopher, was not even invited until after he protested, they pressed for a hard line. Mr Clinton agreed, and the result is political brinkmanship.

The US moved first with sector-specific sanctions, and Japan responded with a promise to draft a market-opening plan. But underneath the surface, it is not business as usual. Mr Bradley fears that the reform-minded Mr Hosokawa will be driven back into the arms of Japan's all-powerful bureaucracy, which for decades has been responsible for the closed-market policies.

In addition, the US insistence on targets for market share does smack of managed trade, in which world markets would be carved up by big cartels. This goes against the free trade principles so painstakingly negotiated in the Uruguay Round agreement and in the North American Free Trade Agreement (Nafta) which was pushed so strenuously by Mr Clinton.

Instead of pressing for short-sighted sectoral targets which may be counter-productive - the US-Japan semi- conductor agreement, for example, is thought by some to be little more than an entitlement - the US would do better to advocate a macro- economic solution. The deficit with Japan is increasing largely because the US economy is growing and consuming imports while Japan is mired in recession.

Far better to back Mr Hosokawa in his fiscal stimulus endeavours, thus shoring up his position with Japan's recession-weary voters, than to bash him. Even if he goes down, the Japanese people will not soon forget such strident US demands.