U.S., Set for Japan Shootout, May Hit Own Foot : Trade: Administration eyes sanctions for a nonexistent ‘problem’; response could stall California’s economic recovery.

U.S. Trade Representative Mickey Kantor, meeting in Los Angeles this weekend with counterparts from America’s three biggest trading partners, must feel anything but at ease. The Clinton Administration is considering unilateral trade action in knowing violation of the agreements and principles that the ministers are meeting to enhance. That issue hangs like a foreboding cloud over the discussions.

The Administration says it will meet its self-imposed deadline of Sept. 30 to decide whether to threaten trade sanctions against Japan. If reports are true, the action would be taken against Japanese auto parts manufacturers. This should make tensions particularly high with the Japanese minister, since no unfair trade practice in auto parts has been identified. In fact, there have been repeated private admissions by U.S. government officials that the auto parts “problem” is largely political, not substantive.

Imposing unilateral sanctions against Japan with respect to auto parts would be a flagrant violation of the General Agreement on Tariffs and Trade and would repudiate the new dispute-resolution framework the United States fought so hard to get as a part of the GATT Uruguay Round agreement--the implementation of which the ministers are meeting to discuss.

The United States would be taking the action simply because it doesn’t like the balance of trade between the two countries, and in spite of the failure of repeated, exhaustive attempts to document charges of unfair trade practices in autos and auto parts. A U.S. decision to act without evidence of wrongdoing would abandon 50 years of global-trade consensus and fly in the face of America’s longstanding support for free trade in competitive world markets.

Should the United States decide on Sept. 30 to move toward sanctions, Japan’s auto makers will urge their country to “take whatever actions are appropriate” in response. We may be on the brink of a trade confrontation the likes of which we haven’t seen since before the Depression.

To solve a “problem” that doesn’t exist, millions of American jobs would be put at risk. In California, exports account for 9% of the economy and 1.4 million jobs. The shock of an international disruption of trade would register as a new and economically disastrous kind of earthquake in a state still struggling to recover from the last recession.

The irony is that so much has already been accomplished to increase U.S. sales to Japan in both autos and auto parts. Largely as the result of an intensive and sustained industry-to-industry, company-to-company effort, Japanese purchases of U.S. auto parts have jumped more than 500% since 1986--from $2.49 billion to $15.5 billion. In just the last five years, the number of U.S. suppliers to Japanese auto makers has grown more than fourfold, from about 300 to about 1,250.

U.S. auto makers are watching their sales in Japan soar since the recent introduction of basic marketing techniques like price cuts and the offering of cars equipped with right-hand drive. All this progress, and that potentially yet to come, would be blown away by the trade conflagration Kantor and his boss may be about to provoke.