A World Gathering into 3 Trade Blocs


Paris. -- America's Treasury under secretary for international affairs, Lawrence H. Summers, gave a good talk in Tokyo June 25 to the main Japanese business organization, the Keidanren, anticipating the Group of Seven industrial nations' meeting in that city next week. He said that the United States does not ask Japan for special treatment for American industries but a general opening of Japanese markets to foreign manufacturers and investors.

He said that the market share inside Japan of manufactured imports still is less than half that of the other major industrial countries. This "peculiar resistance" to foreign goods and services has persisted over the years despite all the efforts the United States and the European Community have made to open Japanese markets. He also pointed out that the situation is not the result of Japan's goods being superior to imports, since a broad range of American high-tech manufactures do better than Japan's in third markets, but still can't sell in Japan's markets.

All of this has been said before, with slight result. The Group of Seven meeting already looks doomed, with respect to any specific improvement in the Japanese trade situation. The Japanese as well as the Germans have said there will be no growth targets set or trade deficit limits established at next week's meeting, as the United States has proposed. And the French have already vetoed any trade agreement so long as the United States threatens unilaterally to impose punitive duties on steel imports.

Washington's problems with Tokyo and with the European Community are different. Japan genuinely is a closed economic and trading community for reasons deeply embedded in Japanese historical assumptions and Japan's political culture. Mr. Summers said in his speech that the old rationalizations of Japanese vulnerability -- islands lost in the north Pacific, poor in resources, doomed to export to live, for whom the rest of the world must make exceptions -- no longer are credible. But while others may not find them credible, they still are a force of great consequence within Japan, and talking will not change that.

European protectionism is not culturally based but purely expedient and selective -- just as is American protectionism. It results from pressure groups (such as the farmers' lobby), economic calculation, the perceived need to shelter particular high-technology industries, and includes protectionist decisions made for non-economic reasons -- for example, barriers to American film and television exports.

The French in particular wish to protect their film industry, the XTC last commercially successful cinema industry in Europe, and the French and a number of other governments are also concerned to limit television imports which, like American films, have already been amortized on the American market and can therefore be sold in Europe at prices no European production can meet. They are not refusing "superior" American products: They are resisting a form of dumping.

They are also concerned with artists' rights. They say the writers and directors of programs and films should have a permanent say about how these are used. American practice is to treat a film or television program as a commodity which the purchaser can cut, alter, "colorize" or otherwise do with as he wants, without regard to the maker's intentions.

Thus the European obstructions to trade reform are specific and have either a reasoned basis or are caused by a purely domestic political vulnerability.

The same thing is true of American protectionism. Washington wants to restrict steel imports because steel lobbyists are powerful. The American farm lobby is powerful. However, there is a certain problem in the American case which can be called cultural.

The American government system is so divided in powers and structurally contentious that no administration is capable of speaking for the U.S. government as a whole, and none can be sure that it can deliver the agreements it makes. Its problem is multilateral negotiation -- simultaneously with Congress and with foreign governments. Concessions on one front jeopardize those on the other. That is the reason the "fast-track" mechanism was adopted, which -- temporarily -- allows the administration to make agreements which Congress has then to vote as an all-or-nothing choice.

The result of all this induces considerable pessimism about whether we really are going to see global trade liberalization. To the contrary, before long we may find ourselves in a world economy consisting of three large, and more or less closed, trading blocs. Whether this would be good or bad for North America and Europe remains to be seen. It would almost certainly be very bad indeed for Japan.

William Pfaff is a syndicated columnist.

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