THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, June 30, 1995 TAG: 9506300025
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 54 lines
The 11th-hour trade deal with Japan is a big political win for President Clinton. He took a stand, didn't flinch and got much of what he wanted. For a man often derided for waffling and flip-flops, that's victory.
But the practical results are harder to gauge. In the past, Japan has made last-minute concessions and afterward there's been little follow through and no real change.
Under the terms of the deal, American carmakers will find it easier to establish dealerships in Japan and barriers against American replacement parts will be eased. But that doesn't mean Japanese will buy the products.
Meanwhile, Japanese automakers agreed to build more cars in the United States and to use more American parts in the process. But there is no way to enforce compliance. The Japanese balked at numerical targets and the United States gave ground.
It is likely that this trade deal will modestly improve American access to the Japanese market and give Japanese consumers greater choice. It should benefit American parts makers, but for the big three automakers it will be a mixed blessing. More opportunity abroad, more competition at home.
A major Clinton goal was to break up the Japanese keiretsu - webs of corporate-family relationships that make it hard for outsiders to compete for business. Not surprisingly, this agreement fails to eliminate the keiretsu that are a central feature of Japan's network capitalism.
Eliminating the keiretsu simply isn't going to happen. It's how the Japanese have structured their economy. After World War II, the American Occupation set about to break up the large commercial empires of the time known as zaibatsu. But within a decade they were reborn and reconstituted as today's keiretsu.
The six biggest horizontal networks control 40 percent of Japanese bank capital, 66 percent of trade and commerce and produce half of all cars and heavy machinery. They aren't going to vanish. Business scholars regard keiretsu as a major contribution to industrial organization.
Looser than monopolies, keiretsu ``operate as communities of shared interest, shared capital and shared risk,'' according to historian Kenneth Courtis. The companies own each other's shares and supply each other with products. The network provides competitive clout in good times and stability in hard times.
American companies who operate out of an ethos of dog-eat-dog rugged individualism detest keiretsu, but they work. Rather than plotting futilely to eliminate Japanese keiretsu, it may be time for American capitalism to emulate them. by CNB