Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.misc From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: September jump in Japan's trade surplus sends signal to Date: Fri, 6 Nov 92 11:28:29 EST Message-ID: \SE C;MONEY \SS (WS) \HD September jump in Japan's trade surplus sends signal to Clinton \BY Scott Miller \CR REUTERS NEWS AGENCY \DT TOKYO TOKYO - Japan announced another hefty increase in its trade surplus yesterday, a stiff reminder of one of the most stubborn problems President-elect Bill Clinton will face as he takes control of U.S. trade policy. Japan's unadjusted balance of payments with the world - the broadest measure of trade in goods and services - widened to a $12.05 billion surplus in September from $8.96 billion a year earlier, the Finance Ministry said. "This is going to be a new ballgame for the Japanese now that the Democrats are in power," said Paul Summerville, economist at Jardine Fleming Securities Ltd. "The surplus is going to be near the top of Clinton's trade agenda." Despite years of hard bargaining under two Republican U.S. administrations, Japan's 1992 current-account surplus with the world appears likely to exceed $100 billion, easily surpassing the previous record high of $87 billion set in 1987. The Finance Ministry also released Japan's unadjusted trade balance for the first six months of this year, which showed the surplus widening to $66.27 billion from a revised $51.10 a year earlier. Just how Mr. Clinton and the Democrats will deal with the problem is the subject of considerable consternation in Tokyo business and trade circles, where some fear a Democratic administration will not hold to the principles of free trade as firmly as the Republicans. "We hope the new U.S. administration will take a decisive attitude against protectionism to preserve the world free-trade system," Prime Minister Kiichi Miyazawa said in parliament. Perhaps doubly worrying for Mr. Miyazawa is the trade surplus with the United States, Tokyo's most outspoken trading partner. The gap had been fairly steady recently but now appears set to grow about 20 percent this year, some economists say. The reasons behind this month's surplus are much the same as in previous months and will likely keep the surplus large in the months ahead - a sluggish domestic economy, continued firm demand for Japanese goods abroad and the strong yen, which exaggerates the size of the surplus data. The increase came in large part from growth in the trade component of the current account, which widened to a record high in September of $13.58 billion from $10.85 billion a year ago. Exports in the month climbed to $30.82 billion from $26.96 a year ago, while imports edged up slightly to $17.24 billion from $16.11 billion. Mineko Sasaki-Smith, economist at Credit Suisse, said the export figure could grow even more quickly in the future because Mr. Clinton is expected to prime the U.S. economy with new fiscal measures. A faster-growing American economy would expand demand for exports, widening the surplus. "The surplus will inevitably grow," she said. The balance of payments also measures trade in services and some forms of unilateral fund transfers. The deficit in this account remained fairly stable at $1.19 billion compared with $1.59 billion a year earlier. The long-term capital account swung steeply into an $8.1 billion deficit compared with a surplus of $14.78 billion a year earlier, and many here hope it will stay that way. Japan has historically been able to at least partially defuse complaints about its balance of payments surplus when the long-term capital account is in deficit, arguing it is recycling the surplus to help meet the world's capital needs. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM