32 MARCH 2024 | THE FOREIGN SERVICE JOURNAL With the Japanese, we moved from complaining about one particular product to talking to them about entire sectors, and we also began structural adjustment talks. For automobiles, of course, the voluntary export restraint [VER] agreement was negotiated [restricting the annual import of Japanese-made passenger cars to 1.6 million units for three years]. I think on the economic side, we were making progress in terms of levels of sophistication to understand that you can’t solve economic problems writ large by negotiating product by product. You have to talk sector by sector, or especially systemically. … The Japanese were making smaller, more fuel-efficient cars, but Americans weren’t buying them in large numbers, until the first oil crisis, where we had long lines in this country for gasoline; at that point Americans saw the attraction of a smaller, more fuelefficient car. The Japanese had the product and the inventory, so sales really increased. … I’d always believed we made a mistake as a government on the voluntary export restraint agreement, because, from my point of view, we should have extracted an agreement from the U.S. auto industry that it would use the time frame of the VER to make changes and become competitive. … The U.S. auto industry, from my point of view, pocketed the protection they got from the VER and kept doing business the same way as before. … I do support what’s generally considered free market economics and also the global trading system. And I do agree that it’s very difficult for governments to pick winners and losers; and ours, by and large, shouldn’t try to do that, because we’re really not very good at it. But, that said, if you are going to give protection to an industry … as a government, we should extract something from that American industry that would press it to take steps to become competitive. In the steel industry, you can see we’ve lost the huge steelmaking plants, but what we have gained are niche steelmaking companies where we are still very competitive; people did retool, and those who are in business now are much more competitive, even internationally, than they would have been, I hope, had no protection been given. I think you have to acknowledge some role for government that isn’t too intrusive; but governments usually step in with protection for any number of reasons, most of them political and not economic. … Both sides [saw] a maturing of the relationship to the point that you could get to talk about the structural issues … because they could be an engine for growth globally, as opposed to the U.S. having the only engine. They could burden-share, if you will, the responsibility for growth. … There are very few embassies around the world that influence or affect economic policymaking, and Tokyo is one. And, therefore, that is another illustration of the importance of the relationship, because our reporting out of Tokyo could affect decisions made in Washington vis-à-vis our own economy and how we saw things, and I think that is important. Aurelia “Rea” Brazeal speaks at an American trade fair in the early 1980s during her tour as trade officer in the economic section of U.S. Embassy Tokyo. COURTESY OF REA BRAZEAL We were making progress in terms of levels of sophistication to understand that you can’t solve economic problems writ large by negotiating product by product. You have to talk sector by sector, or especially systemically. —Rea Brazeal
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