Trade may hold key to U.S.-Japan relationship

Press, Volume CX, Issue 32462, 24 November 1970, Page 20

Trade may hold key to U.S.-Japan relationship

(N.Z.P.A. Staff Correspondent) WASHINGTON, Nov. ?2. The business unrest afflicting United StatesJapanese trade is seen in many quarters in Washington as confirmation of the view that the two countries are rapidly approaching a crucial stage in their eventual political relationship. A major ,trade war between the two economic giants would in itself be damaging enough to existing world trading patterns, but the prospect of it souring political relations is felt of even more concern. New Zealand regards a prospering and stable relationship between Washington and Tokyo as essential to peaceful and orderly development of Asia and the Pacific. It is evident also that good relations between the two capitals is a cornerstone of the Nixon Doctrine. JAPAN’S GROWTH The danger posed by trade disputes is that the acrimony engendered’ by them will spill over into other areas of the relationship. It is clear, however, that both countries are well aware of this possibility. Administration sources say that it is one reason why the negotiations on textiles between the two are being handled by White House staff; the Administration wanted to emphasise at the highest level, its interest in seeing agreement reached. With the Japanese economy burgeoning, to the extent that within the next decade she is expected to surpass the Soviet Union as the world’s second-largest economic Power, increased conflicts of interest between traders of the United States and Japan are considered inevitable.

The need, as Washington and Tokyo see it, is to establish a secure working arrangement, capable of ensuring that these trading dis-

putes—more than simply irritants to the industries involved, but nevertheless minor compared to the need to preserve close political relations between the two countries—do not undermine the existing relationship. PRECEDENT SOUGHT Administration sources say that the United States hopes that one outcome of the current negotiations may be agreement on a formula for dealing with similar trade disputes in future. There are some notable differences between the two. Washington, for example, frequently prods Japan to play a bigger part in Asian economic aid programmes, particularly those in South Vietnam and Cambodia. But these differences are seen as ones which would normally be expected to arise in dealings between the two countries. They impose no great strain on either. Development of an all-out trade war could, however, sour the relationship. Neither Government wants it, and diplomats in Washington are watching for signs that they can reach an accord which may provide a precedent for settling the further disputes certain to break out between

the traders of both countries.