Beyond Peace (18 page)

It is no secret that nations also are often at their best when fighting an enemy. Politicians can sometimes win elections by running against an imaginary enemy, but responsible nations cannot indulge in such a luxury. In the era beyond peace, the United States does not need a new adversary on the scale of the former Soviet Union in order to stay strong. It needs only to understand that the maintenance of prosperity, peace, and freedom at home and their extension abroad are causes as noble and as worth uniting behind as were the efforts to win World War II and the Cold War.

Japan-bashing in the United States and U.S.-bashing in Japan are totally irresponsible. There have never been two great nations more different and yet more alike. We are both democracies. We both have free-market economic policies. We are both trading nations with a stake in free trade. Neither of us has designs on the territory of the other. Yet culturally we are light-years apart. I know from experience that the Japanese can be infuriating in economic and diplomatic negotiations. I am sure that we are probably just as infuriating to them. But we must keep a proper sense of perspective, as historian Walter McDougall has insisted:

It would benefit Tokyo and Washington to recognize that their common security concerns are vastly more important than their commercial spat. To walk into the twenty-first century in any posture other than lockstep would be madness. Japan and America, pooling their complementary strengths, can assist Korean unification, the development of China and Siberia and provide the foundation for a multilateral regime with minimum danger to themselves or threat to others. But a Japan and U.S. at odds and underarmed would again, in the second Pacific century, bow their necks to the cruel yoke of geopolitics.

Such advice should be heeded by those—liberals, a few isolationist conservatives, and Ross Perot—who have advocated that the United States raise the banner of protectionism. A policy of economic, political, and strategic isolation was tragically wrong in the 1930s. It is wrong now as well. The United States is inextricably bound to a world trading system. Exports currently account for 11 percent of our GNP, and that figure is bound to rise significantly with the implementation of NAFTA and GATT. Rather than hunkering down in the foxhole of protectionism, we should relish the opportunity to achieve excellence by competing with others.

“Managed trade” is the code term in the United States for a solution of our economic problems with Japan. While popular in some quarters, it would be a disaster for the United States. In such a contest, Japan, where government and business act as one, would have an enormous advantage over the United States, where government is often antagonistic toward business. Setting targets for Japan is only thinly disguised protectionism.

We should under no circumstances adopt a national industrial policy under which unqualified bureaucrats would dictate business decisions better left to private markets. Nor should we subsidize American industries to even the score with Japan or other industrial powers. Governments cannot predict economic winners or have the imagination to identify the boundless possibilities of the future. Only private entrepreneurs can. The answer to our trade deficit is for American business to make better products, for which only free trade and free markets provide adequate incentives.

The debate about the highly technical issues involved in NAFTA and GATT has obscured the simple but very profound stake the United States has in aggressively supporting a policy of free trade.

Free trade is an investment in peace. While nations that trade with each other have often fought with each other, trade is a powerful incentive to avoid war. Trade is also an investment in
jobs. Exports were behind half the new jobs created in the 1980s. Under GATT and NAFTA, they will create over two million more by 2004.

Free trade is also an investment in progress. Americans are a competitive people. We want to be the best. We can be best only if we compete with the best. When we build walls of protectionism around us, we doom ourselves to mediocrity.

Contrary to alarmist cries from Japan-bashers, U.S. exports to Japan are increasing at a higher rate than those to the rest of the world. Since 1987, our exports have increased at a rate of 13.9 percent annually, while those to Japan alone have increased at an average rate of 15.1 percent. Since almost all the new U.S. jobs created in the same period came from export growth, it is imperative that these rates be sustained and increased. Because of the link between new exports and new jobs, we must continue to resist protectionist pressures, despite the siren calls of the trade demagogues. It is estimated that over the next few years 25 percent of the growth in Western economies will come from increased demand in Japan and the rest of Asia. To take protectionist measures now would be the height of irresponsibility.

More significant than the Japan trade deficit is the Japan attention deficit. As Japan begins to pay more attention to the world, U.S. policymakers must lead in paying more serious attention to Japan. There are too few Japan experts in the upper echelons of the State Department or in the media. Since the end of the Cold War, much of the drama has gone out of summit meetings between the leaders of the United States and Russia, and yet they receive far more coverage than visits to Washington by Japanese Prime Ministers, which are usually played only slightly more prominently in the newspapers than the annual delivery of the official national turkey to the White House on the day before Thanksgiving. Until recently, Presidents have appeared to spend no more time worrying about Japan than about Mexico—and the neglect of Latin America by successive administrations has itself been appalling. We must waste no time
now in getting our priorities in line with economic realities. For example, the Asia-Pacific Economic Cooperation group, which includes Australia, Brunei, Canada, China, Hong Kong, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and the United States, is pathetically underfunded. A high U.S. profile in the APEC process is essential if our interests are to be protected. Yet we contribute only $382,000 a year, compared with $50 million spent on the Europe-based Organization for Economic Cooperation and Development, and $70 million for the Latin America–based Organization of America States.

When I first met Harold Macmillan in Washington forty years ago, he said, “Alliances are held together by fear, not love.” Until the end of the Cold War, the U.S. strategic relationship with Japan was strong, but it was based on fear. With the fear gone, we cannot expect that we will love each other. In fact, there are times we may not like each other. We must build a new relationship, based not on the fragile foundation of fear but on the solid foundation of mutual economic and security interests.

To do business together economically, politically, and diplomatically in the era beyond peace, both the United States and Japan must change. The United States must bring its budget deficit under control, learn to put a premium on excellence, and reverse the flow of power and money toward the federal government in Washington. Japan must play a major role on the world stage, empower its consumers by opening its markets, and reform its political system to give more authority to its elected leaders instead of to the insulated bureaucrats who have ruled Japan for decades. Political and electoral reforms adopted in January 1994 provide the first real chance of fundamental change since the United States imposed a constitution on Japan in the wake of World War II.

Bureaucrats are still infinitely more powerful in Japan than in the United States, where voters would not tolerate a political system that gave elected officials so little real power. But the bell
may finally be tolling for them, in spite of the skeptics who say that they will emerge from this latest round of reform even more powerful than before. For years, when anyone complained about the unresponsiveness of Japan's bureaucratic political system, the standard answer was
“Shikata ga nai”
—“It cannot be helped.” But beginning with the July 1993 elections, when the Liberal Democratic Party lost its majority in the Diet for the first time since 1955, there has been a glimmer of Japanese
glasnost.
A new group of reform leaders is working to wrench control from the bureaucrats. Change will not come quickly, but it will come. If it is possible for the Berlin Wall to come down and the communists to be driven from the Kremlin, it is also possible that Japanese voters may someday have the same ability to change the course of events as voters in the other industrialized democracies have. It will be tragic if the resignation of Premier Morihiro Hosokawa, who personified the reform movement, prevents the Japanese from achieving what they deserve: a larger say in their own destiny.

Japan is neither the all-powerful Wicked Witch of the East nor an economic Wizard of Oz who relies on special effects to cloak his all-too-human weaknesses. It is coming to the end of a damaging recession, its second major downturn since World War II. Its economy actually shrank during the last half of 1992. Most of its leading corporations faced the possibility of earnings slumps or even losses. As a result of these and other developments, the conventional wisdom was that Japan, portrayed during the 1980s as the world's up-and-coming bully heavyweight, was on the ropes in the 1990s.

As usual, the conventional wisdom was wrong. At the depths of its recession, Japan's unemployment rate was 3 percent—high for Japan, but less than half that of the United States. Its budget is balanced. Its domestic savings rate is 31 percent, compared with 15 percent in the United States. By late 1993, Japan's growth rate was over 2 percent a year. Like the United States, Japan will come out of its recession leaner and stronger
than before—a worthy competitor and, if we adopt correct policies, a valuable friend. Approaching our problems with Japan rationally, without fear, distrust, or awe, will contribute substantially to maintaining constructive relations with this vital ally.

Speaking to the Japanese-American Society in Tokyo in 1953, I said that cooperation between the United States and Japan was essential to peace in the Pacific. The statement is even more true today. The Japanese people, among the world's most ingenious and industrious, are destined to be a major world power. They will make enormously valuable contributions to regional stability and the world economy. Peaceful competition and cooperation between the world's two economic superpowers is essential if the twenty-first century in Asia is to be one of peace, prosperity, and expanding political freedom.

During one of our meetings in San Clemente twenty-one years ago at the second U.S.-Soviet summit, Leonid Brezhnev expressed concern about the growing threat of China. I assumed this was a ploy to induce the United States to choose sides in the Sino-Soviet conflict. When I said that it would be at least twenty-five years before China became a significant economic and military power, he held up both hands with fingers outstretched in what I thought was a sign of surrender.

The translator finally interpreted his gesture. “Ten years,” he said. Brezhnev was closer to being right than I was.

China has become the fastest-growing economic powerhouse in this decade and could become the world's strongest economic superpower in the next century. Over the last forty-five years it has moved from a backward agrarian society to a rapidly developing economic giant. Today its growth rate is 14 percent, the highest in the world among major nations. It has
surpassed Germany as the third-largest economy in the world, behind the United States and Japan. Forty percent of China's GNP is in trade, a percentage higher than that of Japan, the United States, or India. Thirty percent of its exports go to the United States. As a measure of confidence in China's future, foreign investment in China increased by 171 percent from January to September in 1993.

While most industries are money losers owned and subsidized by the state, over half of China's GNP is now produced by profitable private enterprise. Per capita income has tripled in the last ten years. The world's largest communist society could become the world's richest capitalist economy in the next century.

Napoleon, who never visited China, saw this coming. Almost two centuries ago, he said, “China—there lies a sleeping giant. Let him sleep, because when he awakes he will move the world.” The giant is awake and is beginning to move the world.

During my first visit in 1972, most of the Chinese on the streets of Beijing were walking. In 1982, the majority were riding bicycles. On my last visit in 1993, huge traffic jams congested the streets of Beijing, Huangzhou, Guangzhou, and Shanghai.

In 1972, we left behind a satellite TV-broadcasting unit that we had brought with us for the use of the American press. It turned out to be a Trojan horse for Western influence in China. At that time, there were about three hundred thousand television sets in China. In 1993, a billion Chinese saw television on 146 million television sets, most of them manufactured in China. The communications revolution has made it possible to send vivid pictures of life in free countries over borders, and no ideological SDI can shoot them down.

Some observers contend that we no longer need a close relationship with China, since the threat of Soviet aggression has disappeared. The other side of that coin is that the Chinese no longer need the United States to protect them against possible
Soviet aggression. Both concepts are wrong. In the era beyond peace, China and the United States need to cooperate with each other for reasons completely unrelated to the Soviet Union or Russia.

China has emerged as the world's third-strongest military and economic power. It is strong enough to play a major role in regional conflicts in Southeast Asia, the Middle East, and the Persian Gulf. It is the only country that possesses the necessary leverage to rein in North Korea's ominous nuclear weapons program. We should not underestimate China's ability to disrupt our interests around the world if our relationship becomes belligerent rather than cooperative. China's critics should remember that it did not exercise its veto in the United Nations during the Persian Gulf War. With its veto power, it could effectively bottleneck any resolution that we try to pass in the future. This does not mean that we should defer to every Chinese concern. We have leverage because China needs America's economic cooperation and respects our military might. We should use that leverage to nudge China's policies in constructive directions.