(10 of 10)
Avoiding that kind of protectionist debacle will take considerable American self-discipline. Among other things, policymakers must speedily reduce the federal budget deficit, which has fueled so much excess U.S. consumption. But there will also have to be considerable changes in U.S. corporate and educational culture. American businessmen, who have traditionally paid most of their attention to domestic markets, must become more aggressive in going after foreign sales. American managers also need to take a leaf out of Japanese manuals about greater worker involvement in product quality control. The U.S. education system needs vast improvement before it can produce blue- collar graduates on a par with Japanese production workers. If U.S. businessmen want to penetrate foreign markets, there will have to be much greater emphasis in U.S. schools on the successful learning of foreign languages.
More, rather than less, openness in both the U.S. and Japan would also help. Japan's need to reinvest its surplus cash is one impetus driving the country ever closer to the U.S. Another is Washington's need for Japanese funds to finance the budget deficit. Notes Goldman Sachs' Hormats: "Japan and the U.S. are locked in an embrace from which there is no escape. It may create some discomfort, but there is no longer any way out of it."
The question remains of how much discomfort -- not to mention occasional pain -- may be involved. If, as the Reagan Administration hopes, the semiconductor skirmish spurs Tokyo to more urgent efforts to settle trade disputes, it will have served a useful purpose.
The history of trade sanctions, however, shows how dangerous commercial conflicts can be. One sobering example dates back to 1941, when the U.S. and other Western powers imposed sanctions on the export of iron and manganese to Japan for its incursions into Manchuria. That embargo played a role in the Japanese decision to attack Pearl Harbor. Nothing remotely similar in the way of hostility, of course, looms in the current trade battle. But as the two sides confront each other, they need to be acutely aware that deep antagonisms over trade can often contain the seed of future disaster.
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CREDIT: TIME Charts by Joe Lertola
CAPTION: Japanese exports to the U.S.
DESCRIPTION: Pie chart in shape of mortar.
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CREDIT: TIME Charts by Joe Lertola
CAPTION: U.S. exports to Japan.
DESCRIPTION: Pie chart in shape of mortar.
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CREDIT: TIME Chart by Joe Lertola
CAPTION: SKYROCKETING YEN. % increase against dollar since Jan. 1985
DESCRIPTION: Line graph in form of rocket's tail exhaust.