REVIEW & OUTLOOK (Editorial): The Banzai Pipeline
If Japan is worried by the sudden outbreak of protectionist bombast in Washington, welcome to the club. We too have been more than a little shaken by the King Kong roars from the House and Senate chambers this past week. They threaten to touch off jungle emotions no one could control. And nothing would halt the U.S. economic recovery or send U.S. living standards tumbling faster than a trade war with Japan.</br></br>The most serious warning signal came Tuesday when a resolution was whooped through Sen. Packwood's Finance Committee demanding U.S. retaliation with tariffs and quotas unless the Japanese compensate Americans for sales lost because of "unfair trade practices." Sen. Dole wisely pigeonholed this document to give legislators a chance to cool off on their Easter holidays, but there is no guarantee they will return with any greater wisdom than when they left.</br></br>As we have said here before, Japan is not blameless for this outburst of jingoism. Prime Minister Nakasone should have been more forthcoming when the U.S. asked for a fairer shot at the Japanese market for telecommunications equipment. The Japanese finally made concessions but Mr. Nakasone still is insisting that a Japanese committee should "approve" imported equipment, at least for the next year. That has a protectionist smell.</br></br>It's inconceivable why Japan plays games like this. With its huge stake in international trade, it should strive to make itself one of the world's least protectionist nations. Its tariffs are lower than those of the U.S., but its non-tariff barriers are the rub. Mr. Nakasone has promised new "market opening" measures this month, but it will come as a big surprise if they are impressive improvements.</br></br>The U.S. would be even more foolish, however, if it took steps to limit its trade with Japan. As George Gilder observed so astutely on this page last week, U.S.-Japanese trade is synergistic. Both sides benefit enormously, despite the U.S. "deficit" American mercantilists are always harping about. High-quality Japanese components are vital to high-tech U.S. products. Japanese competition keeps U.S. manufacturers on their toes. Most important, inexpensive Japanese goods help Americans raise their living standards, reducing wage demands on U.S. manufacturers.