THE PRESS TUESDAY, JANUARY 26, 1988. Mr Takeshita in the U.S.

Press, 26 January 1988, Page 12

THE PRESS TUESDAY, JANUARY 26, 1988. Mr Takeshita in the U.S.

Mr Noboru Takeshita’s visit to Washington this month as Japan’s Prime Minister was a much quieter affair than visits by his predecessor, Mr Nakasone. President Reagan and Mr Nakasone used to call one another “Ron” and “Yasu.” It is said that Mr Reagan and Mr Takeshita called one another “Ron” and “Noboru”; and how they addressed one another was bound to be one of the questions asked about the meeting. If they had stuck to surnames, it would have been interpreted as a sign of coolness between the two leaders. There were enough signs of coolness as it was.

Mr Reagan and Mr Takeshita no doubt saw no reason to add to it. This does not mean that Mr Takeshita shares the dynamism of Mr Nakasone which so appealed to Mr Reagan and to the American public. Mr Nakasone was rare among Japanese leaders; Mr Takeshita fits more easily into the pattern of keeping a low profile and concealing any bounce in his personality or manner. In one way, that probably helped U.S.Japan relations at the moment. There is so much ill-feeling among members of Congress about trade with Japan and so many worries about losses of jobs that, if Mr Takeshita had attracted a great deal of attention, he could easily have become the focus for Congressional anger. The main outcome of the Washington meeting was that the United States and Japan agreed on steps to stabilise the dollar. They plan to do this by using their central banks to prop up the price of the dollar. Japan agreed that the United States could use its Special Drawing Rights from the International Monetary Fund for yen. The effect will be to maintain the dollar about its present level. This would benefit Japan because the value of the dollar should not continue to slip, thereby making Japanese goods higher priced in relation to American goods. It will also have certain benefits for the world economy as a whole because so much of the world’s trade is conducted in dollars.

The falling value of the United States dollar has already given rise to world-wide concern, and various international agreements are reported to be in readiness to hold up the value of the dollar. The United States balance of payments improved dramatically in November when the deficit was $13.2 billion, compared with $17.6 billion

in October. The United States trade representative, Mr Clayton Yeutter, has attributed much of the improvement to increased exports of manufactured goods and thinks that the October figure was an aberration. He said that the United States was in the middle of an export boom. Considerable debate has been conducted about whether a fall in the value of the United States dollar would be sufficient to bring about a turn-around in the trade deficit that the United States has been running. That may still be an open question; but, at the very least, it can be observed that the improved balance-of-payments position has coincided with a fall in the value of the dollar. Mr Takeshita also agreed to continue efforts to open up the Japanese market for agricultural produce and to see what could be done to enable American construction firms to compete for Japanese contracts. That is the kind of tentative undertaking to be expected from Mr Takeshita. Before he went to Washington there was speculation that Mr Takeshita would attempt to narrow the “perception gap” over allowing United States construction firms to compete for contracts. For some time the United States Congress has not been in a mood to listen to the reasons why Japan cannot do something. But he left the United States without inciting fierce criticism.

Mr Takeshita’s undertakings on trade and the export boom the United States is experiencing may be enough to head off Congressional action to institute trade protectionist measures. The Reagan Administration has consistently opposed trade protectionism and has argued vigorously for a more open world trading system. Just when United States exports are booming would be a bad time to bring down protectionist measures which would be bound to bring retaliation in kind.

Japan’s own balance of payments continues to be in surplus so, even if the increase in the value of the yen in relation to the dollar means that Japanese exports are more expensive compared with American products, Japan is still doing sufficiently well not to be troubled. The relations between the two economic giants hold the key to world trade and both Mr Reagan and Mr Takeshita showed that they understood the importance of this key.