JEI's Spin on the News

Japanese Policymakers Struggle With Aftermath Of Seattle Debacle

Monday, December 13, 1999

While street protests and the breakdown of talks among the United States, Japan, the European Union, and developing nations got most of the attention regarding the multilateral trade talks in Seattle in late November and early December, Japanese analysts are pointing to another schism that the talks highlighted: that among Japanese bureaucrats.

Three Japanese ministries — the Ministry of Foreign Affairs, the Ministry of International Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries — shared responsibility for arguing Japan's positions in Seattle. Unfortunately, their interests were sharply divergent. As it has in the past, MOFA tended to put emphasis on maintaining good relations with the United States, which made it amendable to overtures to the Clinton Administration. MITI, perhaps still nursing wounds from its bitter fight with Washington in 1995 over motor vehicles, was and is eager to take on the United States over this country's dumping laws, which target primarily industrial goods in MITI's bailiwick. MAFF simply wanted to prevent any liberalization of rice imports as long as possible.

In Seattle, these interests implied divergent tactics. MOFA reportedly wanted to yield more ground than did MITI in Japan's disagreement with Washington over U.S. dumping laws. MAFF was content to make common cause for the moment with the EU over agriculture, as it did to good effect during the Uruguay Round of trade negotiations. In that case, Tokyo yielded on rice only after years of deadlock and subsequent to an agreement breaking a long U.S.-E.U. impasse on unrelated agricultural issues.

The breakdown leaves Tokyo with what might be described as a tactical victory and strategic defeat. During the talks, President Clinton made a high profile telephone call to Prime Minister Keizo Obuchi, in which Mr. Clinton reportedly asked for and failed to get Mr. Obuchi's help in softening Tokyo's stance on dumping. Although tempting to view this development as a Japanese "victory" or at least payback for past American misbehavior, it did nothing to improve the prospect that Japan will find get what it wants from trade talks or any other bilateral negotiations.

Moreover, Japan now faces the likelihood that multilateral trade negotiations will begin early next year, albeit at a snail's pace, on agriculture and services, as stipulated by the Uruguay Round agreement. With the breakdown of the efforts in Seattle to broaden the agenda, there is little prospect that the Asian nation will receive much in value for the "concessions" it do doubt will be asked to make in services and agriculture, both areas in which most analysts believe Japan to be uncompetitive.

Some Japanese analysts believe that, foreign trade negotiators pushing on the "door" to services should find it already opened for them. In other words, they suggest that it is in Tokyo's interest to yield for the sake to boosting the competitiveness of the huge services component of the Japan's economy. This argument, while appealing to economists, is not likely to lead to unilateral concessions on Tokyo's part, however. If they can gain access for Japanese companies to foreign markets in exchange for "concessions" on services, the outcome would be even better for Tokyo. Unfortunately for the cause of a liberal trading regime, the slim hope that Japan could get meaningful concessions from its trading partners dimmed considerably as a result of the Seattle meetings, providing a reason for Tokyo to stall.

"JEI's Spin on the News" are the opinions of one of more members of JEI's staff and do not necessarily represent the views of the organization.

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