UNDERMINING THE WTO

AS EACH DAY PASSES, the Clinton administration's Japan trade strategy looks more cynical. Last week, the United States ignored the rules of the new World Trade Organization - rules it fought for during seven years of negotiations - and cleared the way for $5.9 billion in sanctions on Japanese cars. On Monday, Commerce Secretary Ron Brown hypocritically told reporters, "We are going to follow the rules and guidelines of the WTO."

Yet, the United States already has undermined those rules, and everyone, including U.S. trade officials, knows it. Apparently, this matters little to Mr. Brown or to Mickey Kantor, the U.S. trade representative. U.S. officials have made it clear they see the WTO not as a forum for settling trade disputes but as a smoke screen while they take whatever unilateral trade action they like.* * * * *

When Mr. Kantor announced his Japan strategy two weeks ago, he pledged to challenge Japan's auto import policies before the WTO. This was a first for the United States - a willingness to take a trade dispute with Japan to a neutral court. Even though Mr. Kantor simultaneously threatened unilateral sanctions, his appeal to the WTO seemed to acknowledge that arbitration by outside judges was a viable option.

That impression is fading fast. In the weeks since, Mr. Kantor has pounded away with his sanctions strategy, and he has hardly passed up an opportunity to inflame matters. Last week, he used the release of monthly U.S. trade figures to subtly accuse Japanese auto companies of dumping cars in this country.

In a conversation with reporters, Mr. Kantor criticized Japanese automakers for "continuing to ship products to our markets at lower prices than they are selling them in Japan." That's one of the textbook definitions of dumping, and while Mr. Kantor didn't use that word his intentions were clear. Yet as a lawyer he knows full well this is wrong.

Dumping involves more than selling products at low prices; U.S. companies must be harmed by the low prices to win a dumping case. Since U.S. automakers earned a record $15 billion in profits last year, it's doubtful even Mr. Kantor and the alchemists in the U.S. trade agencies could find the Japanese guilty of dumping.

* * * * *

Mr. Kantor's assertion merely underscores the blatant discrimination of U.S. anti-dumping laws against foreign producers. Mr. Kantor is correct when he says Japanese automakers have been restraining their U.S. prices in the face of a steeply appreciating yen. Under the right circumstances - namely, if U.S. car companies were suffering - Japanese producers could be found guilty of dumping for absorbing higher expenses.

Yet, when U.S. companies do the same thing - swallow higher costs for a while to protect hard-won market share - it is not illegal. Almost every U.S. industry, from autos to airlines, has done this from time to time, without penalty.

Mr. Kantor further defends unilateral sanctions by suggesting that America's growing trade deficit with Japan is largely a result of Tokyo's

closed markets. The deficit, in fact, is largely a product of national saving and investment trends in the two countries. A quick look at U.S.-Japan trade figures shows how little relationship they bear to the "openness" of Japan's market.

Japan's trade surplus with the United States was 60 percent higher in 1994 than in 1990. Yet even Japan's harshest critics would agree its market is more accessible to U.S. products today - to computers, cellular telephones, apples and, yes, autos - than it was four or five years ago. In fact, U.S. exports to Japan grew nearly 12 percent last year - at a time when the U.S. economy grew 4 percent. The trade deficit has worsened because while U.S. exports to Japan are growing nicely, Japanese shipments to the United States are increasing even faster.

* * * * *

There's still a chance U.S. sanctions against Japanese luxury cars can be avoided. Mr. Brown says Washington is prepared to negotiate an agreement ahead of sanctions, and Japanese auto companies are beginning to buckle under the pressure. Mazda said Monday it has stopped exporting two luxury models to the United States because of the sanctions threat.

Washington, mainly for political reasons, is anxious for any victory it can get, coerced or otherwise. In part, that's because the sanctions have more to do with the 1996 presidential election than with trade policy. But if the WTO becomes increasingly irrelevant and trade relations suffer as a result, the United States will have no one to blame but itself.

For the full story: Log In, Register for Free or Subscribe