Asia Times: EDITORIAL: Nerves of steel



	May 07, 1999	atimes.com

Japan Economy

EDITORIAL: Nerves of steel - or nerve of brass?

Last Thursday the U.S. Commerce Department ruled that Japan was dumpinghot-rolled steel in the U.S. market at 17 percent to 67 percent below the''fair'' price. Then the issue was raised by President Clinton during hissummit meeting with Prime Minister Obuchi.

What nonsense, what an absurd way to sour an important meeting thatshould have been devoted single-mindedly to exploring joint measures toassist Japanese economic recovery - for the benefit of both countries andtheir industries.

Once again the preoccupation with electoral politics of the Clinton-Goreteam and their congressional cohorts has thwarted an excellent opportunityfor progress on strategic economic issues. In early April, the Clinton-ZhuRongji summit missed the opportunity offered by Chinese concessions toinduct China into the World Trade Organization; now even more spurious trade issues throw awrench into U.S.-Japan relations.

What exactly is a ''fair'' price for steel or anything else? What's wrong with quality steel provided at low prices to U.S. manufacturers and builders who want it? If Japanese, Brazilian or Chinese steel makers think they can sell steel at lower prices than their American competitors and live with that, why should the U.S. government interfere in the market?

It costs American jobs, is the protectionists' answer - and that answer is as anachronistic as horse and buggy drivers chasing after steam locomotives with pitchforks in the early 19th century. The U.S. economy has proved as capable as any in the world, and more so, to create new jobs for jobs lost in aging and unproductive industries. Keeping cheaper products out of the country will only slow the process of productivity improvement that is so essential to a healthy economy.

Moreover, sources in the U.S. steel industry have indicated that the realcompetition (and the real cause for worry by less productive steel makers) comes not fromoutside the U.S. at all, but from inventive smaller domestic manufacturers employingsteelmaking methods that the older big boys in the rust belt can not handle.

While in the U.S. on his state visit, Obuchi was confronted with thelatest miserable Japanese unemployment figures; the jobless rate is now upto 4.8 percent and still rising. ''That's only natural,'' said Obuchi, as Japan is restructuring its industries.

That comment will not earn him many kudos among Japanese voters worried about jobsecurity. Still, Obuchi is right and needs all the support he can get to see thisdifficult restructuring phase through - rather than being cut off at theknees due to Clinton and Gore's anxiety for the latter's presidential electionchances next year.

But instead of lending support to the embattled Japanese prime ministerwhen he is doing the right thing, the U.S. administration keeps ondemanding more and more Japanese deficit spending and so-called stimulusmeasures.

Well, stimulus is about getting something started. Everyone knows its nosubstitute for the creation of sound economic fundamentals. We are puzzledwhy the U.S. keeps recommending to Japan policies it would reject out ofhand for implementation in the United States. Just wait until the Ishiharasof Japan conclude it's all just a nasty American ploy to keep Japan fromrecovering for good.

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©1999 Asia Times Online Co., Ltd.