Mr Fukuda in the U.S.

Press, 8 May 1978, Page 20

Mr Fukuda in the U.S.

The outcome of the talks between Mr Fukuda, the Japanese Prime Minister, and the United States Administration is of moment to the world at large, not just to Japan and the United States. As a country which lives by exports, New Zealand has a significant stake in what is achieved by the meetings.

Like New Zealand, but with considerably more power, the United States has been trying to prise open the Japanese market. So far, however, the effect proportionately has not been much greater than has been achieved by New Zealand’s recent efforts. The danger for the whole world lies in the protectionist tendencies in the American Congress. If Mr Fukuda is not more forthcoming the pressures for trade protection will increase in the United States. A world swing towards trade protection would plunge the world into a serious depression and New Zealand would be one of the worst-hit countries.

The picture is not simple. Japan has been arguing that taking more consumer goods would upset its own industries. The United States wants Japan to take more consumer goods, but also beef and citrus fruits. Japan appears to hesitate and say that the United States trade deficit may be blamed largely on American imports of oil. some of which are going into storage, conserving America’s own supplies.

Earlier this year Japan agreed to boost its own growth rate to 7 per cent of the gross national product, but there is still a question about whether this will mean that Japanese consumers will buy more. Japan may instead buy oil or raw materials which it would store. Japan agrees, from time to time, to restrain its exports voluntarily. It has not shown much ability to do this. The aggressive marketing of Japanese companies is difficult to restrain in an economy that is not centrally planned. Japan also points to the possibility of a happy outcome for the multilateral trade negotiations at Geneva as a way to correct some of the difficulties in world trade.

The voluntary restraints and the hopes for the Geneva negotiations smack of being bargaining stands rather than serious efforts to play a part in the world economy. Japan does not seem to have got over the surprise at finding itself among the economic leaders of the world. Essentially it is still an inward-looking economy. A generous Japanese gesture at the multilateral trade negotiations in Geneva would probably do more to revive hopes for the world economy than any other single action. There may yet be hope. Japan gives weight to its relationship with the United States almost to the exclusion of other countries.