The Dangerous Business of Defining Trade Threats
It’s been just over three decades since members of Congress smashed a Toshiba boombox with great fanfare on the footsteps of Capitol Hill in protest against the flood of Japanese exports into the United States. The visual of three Congressmen and women wielding sledgehammers made clear the U.S. legislators’ wrath against the ever-growing trade imbalance between Japan and the United States at the height of the trade war in 1987. Since then, trade relations between Tokyo and Washington have been on the upswing, not least with Japanese investments into the United States playing an integral part in driving U.S. economic growth. But as U.S. hostility towards Chinese exports, especially in technology, heats up, there are parallels between Tokyo then and Beijing now in their relations with Washington.
The boombox-smashing event to protest against Japanese imports was not simply a reflection of a U.S. fear about the consequences of the loss of U.S. jobs and competitiveness to Japanese competition and its trade practices. There was also a growing fear of Japan sharing key technology with U.S. enemy states. At the height of the Cold War, Toshiba was found to be selling machinery to the Soviet Union that would allow their submarines to navigate undetected in the sea. While they may not have been as dramatic as Reps Don Ritter, Helen Bentley, and Elton Gallegly with their sledgehammer, there was bipartisan support to tackle the threat of Japan both for economic and for security reasons.
When it comes to China, though, the list of grievances and the potential for conflict beyond trade looms large.
Tokyo’s economic policies are clearly no longer seen as a security threat for the United States. In fact, even as President Trump harks back to the 1980s when describing U.S.-Japan trade relations today, the focus is on the imbalance, specifically the trade deficit in goods and in the export of Japanese cars to U.S. markets in particular. When it comes to China, though, the list of grievances and the potential for conflict beyond trade looms large.
As Washington continues to negotiate a trade deal with Beijing, much of the focus has been on whether or not the White House would back off on some of the demands it has made on the Chinese leadership to move forward with structural reform, particularly on forced technology transfer, protecting state-owned enterprises, and violating intellectual property rights. How the two countries will reach a deal remains to be seen, but within the United States, taking a strong stance against China’s unfair trade practices has become what has become all too rare in recent years, namely an issue that has strong bipartisan support.
The thorn, though, is how to deal with Huawei.
The thorn, though, is how to deal with Huawei. While U.S. legislators by and large remain supportive of the White House’s decision to restrict U.S. federal agencies from using products from the Chinese telecommunications giant in 5G mobile networks amid national security concerns, efforts to rally international support for the U.S. ban have been spotty. European nations in particular have been reluctant to side with the United States, even as countries including Australia and Japan have joined Washington’s position in standing against the company. Meanwhile Huawei itself has stepped up efforts to rally international support against the U.S. decision, escalating tensions between the two world powers.
Unlike Toshiba selling technology to the Soviet Union, there is no evidence that Huawei’s 5G network has violated U.S. security rules, nor has there been a smoking gun to indicate that the company could be used as a gateway for the Chinese authorities to access information overseas illegally. Unlike addressing the issue of reducing trade deficits, there will be no easy solution to resolving how to assess the potential threat of Chinese technology companies doing business overseas, given the close ties between the Chinese Communist Party and Chinese companies. What must be avoided though is for trade tensions to turn emotional and violent, and stoke the flames of nationalism that could only too easily be twisted into xenophobia.
Follow Shihoko Goto, deputy director for geoeconomics and senior associate for Northeast Asia, on Twitter @GotoEastAsia.
The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center. Copyright 2018, Asia Program. All rights reserved.
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