Cut the rhetoric

PUBLISHED : Wednesday, 21 September, 1994, 12:00am
UPDATED : Wednesday, 21 September, 1994, 12:00am

TALK tough, wield a big stick and pray for some concessions from the opposition camp.

That has been the tactic adopted by United States negotiators in trade talks to prise open the Japanese market, a strategy reflected in yet another tough warning issued by its Treasury Undersecretary Lawrence Summers yesterday.

But the time for posturing and threats is fast running out for the two world economic powers.

The US has set September 30 as the deadline for slapping sanctions on some Japanese exports unless Tokyo agrees to open its market for government procurement of telecommunications and medical equipment.

September 30 is also when Washington will decide whether it wants to target other sectors of Japan's economy for possible sanctions over the next year under its Super 301 trade clause.

The stakes are high. The US is trying to reduce its massive trade deficit with Japan - almost US$60 billion last year - and, hopefully, in the process restoring some much needed confidence in the rapidly diminishing US dollar.

Despite the US administration's denial that it was favouring a weaker dollar against the yen - thereby making Japanese exports less price-competitive on global markets - the market has been dumping the greenback.

The time has come for President Bill Clinton and his trade advisers to show the Japanese and the world that they really mean business.

However, the record does not augur well for the Clinton Administration: in China, following some high-profile posturing, the US extended the mainland its Most Favoured Nation trading status without condition.

The Japanese say they will retaliate if the US imposes sanctions. A trade war is the last thing anyone wants but, unless some compromise is struck before September 30, the US will be forced to carry out its threats.

The Clinton Administration knows what it has to do if it wants to retain any credibility in future trade negotiations with anyone.