Business: Free Trade v. the New Protectionism

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BRADSHAW: The U.S. operates with a huge albatross around its neck, and that is the albatross of its traditions. They are the traditions that brought about our antitrust laws and created the private enterprise system and made it anathema for anyone around this table to talk about the benefits of a corporate state. But that is what Japan is today. I would hope that we will consider today what it means to have national goals with industry and government working hand in hand toward those goals. Look at my industry, oil. I have been struggling to get a national energy policy instituted in Washington, recognizing that it must mean more controls for the oil industry rather than less; recognizing that we are going to have to give up vast portions of what we consider to be our inherent rights in free, private enterprise in order to arrive at an implemented national oil policy. There is a quid pro quo for the backing of the Government and that is to accomplish certain things for the nation and not necessarily for the company itself.

FLANIGAN: Japan's strengths are not so great that we must change our whole society in order to counter them.

Why are trade relations especially strained with Japan?

CALLAWAY: I cannot think of any major industry in America that is not subject to great invasion or attack by the Japanese. The problem is that the Japanese system is the most effective monopoly that has ever been developed in the economic history of the world. The Japanese will do whatever they need to do to take over whatever part of the richest markets in the world that they want to take.

D. McCULLOUGH: They zero in on a segment of our market and take it over. Then they will move into the next segment and the next.

C. WILLIAM VERITY: The Japanese have allocated tremendous moneys to building up their steel industry. In doing so, they have used the justification that if they cannot sell steel in their own market, they can always get rid of it in the U.S. In many cases, their price in Japan is higher than in either Europe or the U.S. They don't sell on the basis of profit but to fulfill a national need.

FLANIGAN: It is almost impossible to find out the true domestic prices of Japanese steel.

WRISTON: The British sent a group of chartered accountants to Japan for a six-month study to find out what it costs to build a tanker there. At the end of six months they had had a lot of hot baths and a lot of polite conversation, but they did not find out the real costs. A platoon of cost accountants could make it a life's work and still not find out.

CALLAWAY: Well, Burlington's spy system may be a little bit more effective than somebody else's, and we would be glad to service anybody for a fee and study the cost in your industry. I can tell you that on certain worsted fabrics in 1970, the Japanese textile industry sold its product at least 5% higher at home than in the U.S.

FLANIGAN: I think this view of Japan as an invincible monolith probably is not right. The thrust of the argument has been that because they can have a monopoly in Japan, then obviously they are going to be able to beat us. It is my understanding that American business in general feels that monopoly is bad, that it makes people less efficient.