Business: Free Trade v. the New Protectionism

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C.P. McCOLOUGH: There are some Japanese computers coming into this country; yet my company cannot manufacture computers in Japan.

KENDALL: The road into Japan is about three inches wide. The road into the U.S. is about three miles wide.

RUSSELL DeYOUNG: Japan also has the ability to go into other countries and take our markets. We used to export to the Philippines, but now Japan is going in there and taking our market away.

WRISTON: Another thing is that they have complete exchange control, and the yen is not free. You can sell it for dollars or buy it for dollars only under limited circumstances. So a free market has never set an exchange rate for the yen. I think that is ridiculous. Until they have convertible currency, we will never know what their real trading power is. Everybody says the yen is strong. Let it go out into the world market to compete, and then we will find out.

What should the U.S. do—and not do—to help itself now?

CALLAWAY: We have to have some clout. We should go to Congress and get new legislation—trade laws that say that every nation has a fair and reasonable opportunity to sell its products here, but not to the extent that it can wreck any significant part of American industry or agriculture because of a system like a monopoly in Japan. Then we can call for reconvening of a meeting of GATT [General Agreement on Tariffs and Trade]. With the political clout of the laws having been passed in this country, we might have a pretty good opportunity to get the members of GATT to adopt some rules that would represent fair play.

ROBERT INGERSOLL: I would not like to see us get into a position where there would be retaliation against us from other countries. We had such an experience in the early '60s, when the glass and rug industries prevailed upon President Kennedy to raise tariffs because they were being injured. The Common Market did not retaliate in those industries, but it immediately put a 40% tariff on styrene-based plastics. My company happened to have built a plant in Britain, thinking we could ship into the Common Market, and the new tariff just cut us off. Foreign countries will hit you where you are most vulnerable.

C.P. MeCOLOUGH: We have to show the Japanese that if they are going to dump television sets, we will put an absolute embargo on them. In my experience that is the only way the Japanese are going to negotiate. Until you get their attention, until you have the power to club them over the head, they are not going to negotiate.

WRISTON: We have a Treaty of Commerce and Friendship with Japan, and it requires reciprocity of investment and trade. No one has ever leaned on them to really observe that. Japan also signed Article VIII of the International Monetary Fund,* yet their currency is not convertible. Nobody has leaned on them for that either, so far as I know.

CALLAWAY: If we could get the European Economic Community to ease its nontariff barriers and take 10% of Japan's exports, instead of only the present 2%, that would ease Japanese pressure on the U.S.