September 1 1995 by Chief Executive
To The Editor:
Thank you for the opportunity to be highlighted in Chief Executive. (CE: July/August 1995). I found the story more than a little unbalanced.
Secretary of Energy
To The Editor:
As a former chief executive of a multinational company, I’m not too surprised to see the results of your fax poll on trade (CE: June 1995).
With respect to Japan, I think the problem is that the Clinton administration has gone forward, backward, sideways, and in every other direction in handling the trade relationship with Japan. I have never been a fan of dictating some quantity of purchase by one country’s industry from another, and so I do not favor the quantitative approach that has been used in some areas. Instead, I advocate the opening of markets. This is not easy; I know from personal experience of doing business in Japan that the Japanese can be infuriatingly stubborn and creative in the ways they close their markets. But I think the tide is turning against them.
Events that have transpired since our last American Trader Initiative meeting lead me to believe the World Trade Organization is going to be a major-league organization that commands our attention. It’s just a damn shame that instead of a proven open trader at the WTO helm, we have a person who comes from the protectionist European environment leading it now.
John E. Robson
Robertson, Stephens & Co.
To The Editor:
I do not believe that President Clinton and U.S. Trade Representative Mickey Kantor’s proposal to confront Japan head-on is likely to result in a victory for the U.S. No nation likes to be dictated to with regard to its internal economic affairs. The Japanese culture and internal supplier-contractor relationships are such that they can only be changed over a relatively long time.
When I visited Japan with President Bush in 1992, the issues of auto parts and access to the Japanese market were discussed at length. My impression was that Japan was prepared to open up its auto-parts market eventually, but American industry would have to demonstrate a commitment in terms of local manufacture and continuous service, as well as innovation if it were to become part of the “Japanese team.”
I do not believe the U.S. has many European supporters with regard to the position it is taking vis-a-vis Japan. Everyone recognized that the Japanese market has a xenophobic attitude about foreign suppliers. That attitude can only be changed on a company-by-company, case-by-case basis. In the end, the Japanese must be convinced that buying abroad is a good deal for them and not just a good deal for the U.S.
I understand well the Clinton administration’s frustration at the closed circle of supplier-contractor relationships that exists in Japan. This is a cultural matter and has been built up over many years. There are interlocking ownership interests and interdependency issues that can only be unraveled over time. At Air Products, it took us 10 years to break through with Nippon Steel to win our first oxygen plant order. We were the first Western company to do so in competition with five domestic Japanese producers.
The U.S. chemical industry has formed partnerships with many companies in the Japanese chemical industry to enter that market. If the U.S. automobile-parts producers want to enter Japan, they, too, will have to form some partnerships with Japanese automotive producers and be accepted as part of the family.
The impatient American attitude is not consistent with building long-term, effective relationships with Japanese automotive assemblers.
In short, I believe the Clinton administration’s tack likely will not succeed. It will only harden attitudes, and I fear it will discourage even our friends from supporting our position.
Dexter F. Baker
Chairman, Executive Committee
Air Products and Chemicals