Letters

TRADING PLACESTo The Editor:CEO ambivalence about continuing a policy of managed trade with Japan as indicated in CE’s recent “Short [...]

July 1 1995 by Chief Executive


TRADING PLACES

To The Editor:

CEO ambivalence about continuing a policy of managed trade with Japan as indicated in CE’s recent “Short Takes” fax poll (CE: June 1995) is understandable given the record of U.S.-Japan trade relations.

There are four main reasons why I believe the recent steps taken by the Clinton administration will not force Japan to open its markets to U.S. automobile manufacturers:

  • Since Japan is the negotiating partner, the U.S. approach is more likely to cause a backlash against its demands than to achieve its objectives. Power remains the language of common understanding throughout Asia. Caving in to a U.S. ultimatum would mean an unacceptable loss of face for Japan. The U.S. could pave the way for compromise far more effectively through subtle displays of power.
  • History shows that retaliatory action has little efficacy and produces unanticipated impacts as the trading partner creatively adapts to new constraints. In the 1980s, when Japan agreed to voluntary export restraints on automobiles after numerous rounds of “tough talk” with the U.S., we received an unpleasant surprise: Japan adjusted its export mix, drove up luxury car prices in the U.S., and made even more profit than before on the backs of U.S. consumers. The approach did nothing to make the U.S. car industry more competitive.
  • Believing they can win instant political points by pressuring Japan, U.S. politicos have become fixated on that country to the extent of ignoring other dynamic markets throughout Asia. We must bring the whole Asia picture into focus. Expending the lion’s share of our energies to take on the toughest challenge means making less progress in markets where American goods and services are both valued and competitive.
  • Trade statistics are not the only element in the bilateral trade equation. With a huge capital surplus in the 1980s, Japan‘s spending contributed to our impressive growth in the U.S. After the collapse of the U.S. real estate market, Japanese investors absorbed much of the losses that otherwise would have fallen to U.S. banks and investors. Today, Japan still looks to the U.S. as a desirable investment destination.

This single issue occupies a far higher-than-warranted position on our national agenda. The administration needs to evaluate this carefully before trading our national dignity and image as the world’s only superpower for that of the world’s toughest-talking car salesman.

This letter is not intended as a slam on only the current administration. I take issue with the undue emphasis placed on Japan by many recent administrations and with the political-impact motivation that appears to have fueled the approach to Japan for some time.

Given Japan‘s economic malaise and Byzantine international trade attitude, our company decided to downgrade its presence there for the time being. We can make better profits in other Asian locations. Many companies share this attitude-one that will be to Japan’s net detriment unless it opens up its market.

Therese M. Shaheen

President

U.S. Asia Commercial Development Corp.

Washington, Beijing, Seoul, Taipei


STEERING COMMITTEE

To The Editor:

Robert Lear has the right idea in his “Managing Board Affairs” column (CE: November/December 1994). After reading the article, I discussed Lear’s advice to establish a Board Governance Committee at our board meetings, and in 1995, we formed one of our own. There are so many positive sides to doing this that, quite frankly, we could not find a single reason not to go ahead with it.

Initial responsibilities of our Board Governance Committee-comprising all outside directors-include overseeing board member selection, director evaluation and compensation, upper management assessment, and committee assignments.

Our board feels strongly that forming this committee puts a proper structure into place that will enable it to achieve the expected requirements of shareholders and of the Securities and Exchange Commission, as well as provide valuable input to the company. In effect, the committee will play an influential corporate role that should benefit the company over the long term.

Henry D. Jacobs Jr.

Chairman and Chief Executive

One Price Clothing Stores

Duncan, SC