This classic article on the Japanese trade lobby by Pat Choate, which was first published in the September-October 1990 issue of the Harvard Business Review, is presented here with the permission of the author.
Political Advantage: Japan’s Campaign for America
By Pat Choate
Imagine a foreign country running an ongoing political campaign in the United States, as though it were running a third major political party.
Imagine it spending more than $100 million each year to hire 1,000 Washington, D.C. lobbyists, super-lawyers, former high-ranking public officials, public relations specialists, political advisers—even former presidents. Imagine it spending another $300 million each year to build a nationwide grass roots political network to influence public opinion. Imagine that its $400 million per year political campaign sought to advance its economic interests, influence U.S. trade policy, and win market share in the United States for its target industries.
None of this is imaginary; none of it is illegal. The country that is actually undertaking this political campaign is Japan. Today Japan controls the most sophisticated and successful political-economic machine in the United States. More extensive and effective than either U.S. political party or any
U.S. industry, union, or special interest group, Japan’s campaign for the United
States is designed to serve one very important purpose: to influence the outcome
of politicaldecisions in Washington, D.C. that directly affect Japanese
corporate and economic interests, decisions in which every day hundreds of
millions of dollars — and cumulatively billions of dollars — are on the line.
By knowing about these decisions ahead of the competition, by using its
network of well-connected insiders and lobbyists in Washington, D.C., by
activating its broad-based networkin local communities across the country, by
shaping American journalists’ coverage of economic issues, and by promoting its
opinion leaders in universities and think tanks, Japanese companies and the
Japanese government are able to transform political strategy into a critical
element of corporate and national strategy.
This political game is going on every day, as it was for most of the 1980s.
Among the victories scored by Japanese interests during the last decade–in
supercomputers, machine tools, ball and roller bearings, optical fibers,
satellites, biotechnology, air transport, telecommunications, semiconductors,
legal and financial services — one recent example illustrates the power and
importance of Japan’s growing political influence in the United States: trucks
and tariffs. It is a victory in which Japanese organizations successfully
outmaneuvered General Motors, Ford, Chrysler, and the United Auto Workers and,
in the process, deprived the U.S. Treasury of more than $500 million per year in
Since 1981, the Japanese government has set a “voluntary export restraint”
onthe number of passenger cars it would send to the United States. No such
restraint existed for light trucks. There is, however, a substantial difference
in the tariff levied by the United States on cars versus light trucks: for
passenger cars it is 2.5%, for light trucks, 25%. During the early and
mid-1980s, the Japanese paid the difference in duties without raising any issue;
but in 1987, the situation changed. The large number of new Japanese auto plants
in the United States, combined with a growing demand for light trucks as a
family vehicle, meant that the passenger-car quota was going unfilled. To fill
the limit, the Japanese sent more light trucks. To avoid paying the higher
tariff, they began to reclassify light trucks as passenger cars.
In the spring of 1988, the U.S. Customs Service became aware of Japan’s abuse
of tariff regulations and initiated a review process, inviting comments from
interested parties. The Japan Lobby went to work. Japanese interests responded
by expanding their lobbying team.In October 1988, for instance, Suzuki Motor
Company hired Robert Thompson, a well-connected Republican lobbyist who had been
an aide to Vice President GeorgeBush in the 1980s.
The Japanese campaign began in the summer of 1988 with a letter from
Congressman James Inhofe, cosigned by 30 representatives and 11 senators, urging
Commissioner of Customs William von Raab to classify light trucks as cars.
Inhofe followed up his letter by summoning von Raab to his office to explain why
the review process had been initiated. When von Raab got to the congressman’s
office, he found Inhofe — and John Rehm, who had been general counsel in the
White House Office of the Special Representative for Trade Negotiations during
the Johnson administration. Rehm’s law firm represented Japanese and other
foreign automotive interests, plus American automobile importers. With Inhofe’s
blessing, Rehm sat in on the entire meeting. Both Inhofe and Rehm urged von Raab
not to pursue the reclassification issue, but von Raab refused to preempt the
Customs Service’s decisionmaking process.
On January 4, 1989, Customs ruled that light trucks could not be classified
as cars. In an interview later, von Raab said of the decision, “These vehicles
are built on truck bodies. They have truck characteristics. Most are built in
truck divisions. They are advertised as trucks, off-road vehicles, vans, or
vehicles that can carry cargo. For years, the Japanese have certified them as
trucks when importing them into the United States. Even my grandmother can go
into a parking lot and tell the difference between a passenger car and a truck.
These are trucks.”
Japanese interests reacted swiftly. At a meeting of the world’s finance
ministers, the Japanese minister of finance persuaded his German and British
counterparts — each of whom had a small number of vehicles that would be
affected — to approach U.S.Secretary of the Treasury Nicholas Brady, von Raab’s
boss, and ask for an official reconsideration of the decision. Brady agreed;
within nine days of the Customs Service decision, the ruling was suspended.
Japan’s next move was to seek to kill the ruling permanently. In Washington,
D.C., Japan’s American lobbyists and representatives of the Japanese government
met with officials from theOffice of the U.S. Trade Representative, the White
House, and the Treasury. Japanese automakers financed a public relations
campaign built on the theme that von Raab’s ruling would harm U.S. consumers by
increasing prices on light trucks. Auto importers flooded Congress with letters.
The government of Japan implied that an unfavorable decision could do great harm
to the U.S.-Japan relationship.
In a rare show of political unity, Roger Smith of General Motors, Donald
Petersen of Ford, and Lee Iacocca of Chrysler sent a joint letter to the
president and Congress urging that Customs’s original ruling stand. But in a
fiercepolitical contest on the Big Three’s home court, the Japanese trounced
their U.S. rivals. Within 45 days of von Raab’s original ruling, the Treasury
Department overturned the Customs Service decision: it was official U.S. policy
that light trucks were passenger cars for purposes of the tariff.
Then in a remarkable twist, the U.S. government made Japan’s victory even
more complete: the Japanese convinced the Bush administration to reclassify the
vehicles as trucks for sale once they were inside the United States. This
bureaucratic two-step allowed the Japanese to enjoy the best of both worlds:
first, to reduce the tariff, which is lower for cars than for trucks; and
second, to reduce the requirements for fuel efficiency, safety, and emissions,
which are lower for trucks than for cars.
In the end, for an estimated $3 million investment in lobbyists, public
relations advisers, and political consultants, the Japanese avoided morethan
$500 million per year in import duties — without making a single concession or
agreeing to a single U.S. demand.
Japan’s Campaign for America.
Lobbying, seeking political influence, using information to advance economic
interests — none of this is unique to Japan or to Washington, D.C. in 1990.
Examples abound across the pages of history. Japan’s campaign is the most recent
and most extensive effort along these lines — and as such raises important
questions about how the United States wishes to conduct its democratic
practices. Japan’s government and leading companies together spend $400 million
annually running an ongoing political campaign in the United States. This figure
represents an amount equal to the expenditures of both the Republicans and
Democrats in both the House and Senate elections of 1988, combined. Japan spends
more on its 1,000-person lobby in Washington, D.C. than the five most
influential American business organizations — the U.S. Chamber of Commerce, the
National Association of Manufacturers, the Business Roundtable, the Committee
for Economic Development, and the American Business Council — combined. In
fact, Japan spends more in America in lobbying, politicking, and propagandizing
than the 12 nationsof the European Community combined. The people whom it hires
as its representatives, lobbyists, and spokespersons come from the highest
levels of American public life — the best and the brightest policymakers,
political strategists, legal experts, elected and appointed officials.
Like any high-quality politicalcampaign, the Japanese program in the United
States depends on a tested formula for its success: keep your message simple,
use a variety of credible messengers, and let the echo effect drown out your
opponents. The Japanese have craftedsix basic messages that they seek to deliver
(see the insert “Japan’s Six Excuses”) and five techniques for delivering them.
The components of their ongoing campaign are:
Lobbying and influencing policy,
Politicking at the grass roots level,
Dispersing propaganda, and
Influencing U.S. education and classroom instruction.
This is, of course, completely legal. It all falls within Washington, D.C.’s
often self-serving definition of ethics — which one powerful lawyer-lobbyist
described as, “If it’s legal, it’s ok.” And it all deeply corrodes the integrity
of the economic and political system of the United States.
To the Japanese, a political strategy in the United States — indeed, in
every major market of the world — is a critical element of business strategy
(see the insert “Japan in Europe”). In fact, what an in-depth analysis of
Japan’s systematic political strategy in the United Statesteaches is the
dominant role of politics in the global economy. According to an A.T. Kearney
survey, fewer than 30% of America’s top 150 CEOs even try to influence the
policies of their own government. Japanese business leaders, in contrast, have
eagerly embraced the notion that politics is a critical source of advantage in
global competition. Americans have become accustomed to high-quality, low-cost,
innovative Japanese products in the marketplace. Now the Japanese are bringing
the same high level of performance to a political product offered in the
corridors of Congress and the back halls of the White House.
In politics, as in manufactured products, Japanese strategy follows a simple
and predictable pattern: protect your own domestic market from foreign
penetration, capture as much of your competitor’s market share as possible. In
Japan, it is unthinkable that a top government official would become a top
lobbyist for a U.S. corporation, that a candidate for high office would accept a
campaign contribution from a U.S. corporation, that a foreign government would
stage-manage a grassroots political campaign among its people, or that foreign
companies or governments would establish think tanks to feed ideas into the
government. In all these ways, Japan is a closed political market.
Yet, in all these ways, Japan is gaining political market share in the United
States, spending hundreds of millions of dollars for competitive advantage. To
the Japanese, politics is another legitimate business expense.
It is a business expense that the Japanese incur with remarkable consistency,
coherence, and coordination. As with their larger business strategies, when it
comes to global politics Japanese business and government interests work
together, practicing a unique brand of “economic diplomacy” that puts the
instruments of state to use for economic purposes. For example, a representative
of the Keidanren, the Japan Federation of Economic Organizations, is stationed
in Japan’s Washington, D.C. embassy, and the consul general in Japan’s nine
consulates across the United States functions first and foremost as a chief
economic officer. Moreover, the Japanese are prepared to spend whatever it takes
on politics to secure their economic goals–recognizing that $400 million per
year is a bargain if it safeguards a $50 billion per year bilateral trade
Japan’s political machine in the United States is designed to serve six
national and corporate goals:
1. To keep the U.S. market open for exports from Japan.
2. To smooth the way for additional purchases of key assets in the United
3. To blunt criticism of Japan’s adversarial trade practices.
4. To neutralize or, even better, to capture thepolitical influence of the
U.S. companies that compete with Japan.
5. To influence U.S. trade policies toward Japan, Europe, and all other
markets where Japan has significant economic interests.
6. To create an integrated U.S.-Japan economy that prevents the United States
from confronting Japan economically and politically.
Other nations lobby on behalf of their economic interests in the United
States; in fact, South Korea, Taiwan, and several European nations are now
setting up their own political machines in the United States. But there are
important differences, both in approach and amount. For the most part,Canada and
the nations of Western Europe still rely on traditional diplomacy to influence
U.S. policies; companies from these countries tend to retain representatives
only when they need help to fight a specific decision that would affect their
ability to compete.
Japan, by contrast, has sought to establish anintegrated political strategy.
Moreover, the scale of the Japan Lobby in Washington is unprecedented: the
government of Japan and Japanese companies employ 92 law, public relations, and
lobbying firms on their behalf, compared with Canada’s 55, Britain’s 42, and the
Netherlands’s 7 — the 3 other largest investors in the United States. Japanese
corporations and governmental agencies have relationships with the ten largest
law firms in Washington, D.C. that specialize in trade matters.
Among the nations of the world, only the Japanese governmentoffers a tax
break to its companies that make corporate contributions to civicaffairs — in
the United States. In February 1990, the Foreign Ministry summoned300 of Japan’s
business leaders to a meeting in Tokyo and instructed them to increase their
local donations in the United States. As an added inducement, thegovernment
announced that it would give them benefits on their taxes in Japan for such
The Japanese help finance both the Republican and Democratic parties, make
major contributions to political action committees, andcount on their payrolls
top political advisers to the president, to members ofCongress, to governors,
and to mayors. Charles Manatt, for example, who headedthe Democratic National
Committee in the mid-1980s, is now a Washington, D.C. political adviser to NEC
America. Frank Fahrenkopf, who chaired the Republican National Committee from
1983 to 1989, while in office arranged meetings with top U.S. government
officials for his client, Toyota Motor of North America.
Moreover, the Japanese are willing to be explicit about their political goals
in the United States. According to Akio Morita — chairman of Sony, vice
chairman of the Keidanren, and chairman of the Keidanren-created Council for
Better Corporate Citizenship in the United States — Japan’s investments in the
United States have a specific political purpose. “What we mean by [better
investment,'” Morita wrote in The Japan That Can Say “No,” “is the type of
investment which willget Americans on Japan’s side.” Getting “Americans on
Japan’s side” means changing how Americans vote. The goal set by Morita: “make
politicians stop bashingJapan.”
The Japanese political strategy in the United States replicates the political
mind-set in Japan in some fundamental respects. In Japan, money politics is an
established fact. A golden triangle, consisting of the Liberal Democratic Party
(LDP), elite bureaucrats in government ministries, and establishedcorporate
leaders from business, dominates Japan’s domestic political machinery in a way
designed to serve the country’s economic interests. Money and the exchange of
political favors make the system go: the Keidanren alone provides theLDP with
$100 million each year. In 1990, with the LDP’s 35-year uninterruptedreign in
jeopardy because of money politics and the stain of the Recruit scandal, the
Keidanren and other Japanese business interests contributed more than $1 billion
to keep the party in power.
It is a world of very tight political, economic, and personal relationships.
Take the construction industry, where politics is everything, public spending
critical, and bid-rigging, or dango, alltoo commonplace. The youngest daughter
of former Prime Minister Noboro Takeshita, who was forced to resign in 1989 in
the wake of the Recruit scandal, is married to the son of the president of one
of Japan’s “Big Six” construction companies. Takeshita’s eldest daughter is
married to the son of the leader of the construction zoku — the LDP policy
group covering that particular industry. Takeshita’s half-brother is married to
the daughter of the founder of Fukuda Construction Company, one of Japan’s
largest contractors. Former Prime Minister Yasuhiro Nakasone’s daughter is
married to the heir apparent of Kajima Construction, Japan’s largest
In Japanese politics, moreover, the line between gifts and bribes is hard to
discern. In the Recruit scandal, for example, former Prime Minister Nakasone
admitted that he had received $300,000 from Recruit; his successor, Noboro
Takeshita, admitted that he had received more than $1.5 million. Neither man was
arrested or indicted; the money was classified as political contributions.
In Japan, there is a name for this approach to politics: “structural
corruption.” It is the same approach to politics that the Japanese are now
vigorously practicing in the United States — with the active participation and
eager complicity of American lobbyists, power brokers, and government officials.
It is, after all, greed and self-interest in Washington, D.C. that makes it
all possible, the “revolving door” of government at the highest levels that
confuses “public service” with “personal advancement” and mistakes “legal” for
“ethical.” For many, a top job in the cabinet is merely a sabbatical from a more
permanent career as a registered agent lobbying for a foreign corporation. For
example, between 1973 and 1990, one-third of the principal trade officials in
the Office of the U.S. Trade Representative (USTR) left tobecome registered
foreign agents; most did work for Japan. Fully one-half of those who held the
position as the nation’s top trade negotiator later became lobbyists for foreign
businesses; three of those were subsequently hired to work for Japanese
This pattern of economic relationship between Japan and top U.S. officials
includes other key agencies as well. A 1986 General Accounting Office survey
identified 76 former federal officials who left officebetween 1980 and 1985 and
then became registered foreign agents. The list — which the GAO acknowledges is
only partial — includes 8 special assistants to the president, 5 assistants to
the president, 2 deputy assistants to the president, 1 presidential counselor, a
deputy White House press secretary, a chief of staff to the vice president, a
chairman and vice chairman of the U.S. InternationalTrade Commission, 2 deputy
U.S. trade representatives, 6 senators, 9 representatives, 12 senior Senate
staff, 5 senior House staff, and 4 retired generals. Together these 76 former
top-ranking U.S. officials represented 166 foreign clients from 52 countries and
2 international organizations — 20 of them went to work for Japan.
Japan’s political campaign in the United States, and the eagerwillingness of
American insiders to represent Japanese economic interests in this country, have
serious implications for U.S. companies and the American public. In one critical
industry after another, U.S. companies, originally challeng Japanese
manufacturing prowess, now run the added risk of losing out to the Japanese
competition because of Japan’s well-managed political strategy. American
companies, pressed in the market for the consumer’s favor, may now face the
defection of their own government as an ally in global competition. For the
American public, the issue is even more stark. With so much Japanese money
influencing so many officials in government, the question for the American
people is, “Who do you trust?”
Japan’s Intelligence Gathering.
In late 1988, the Washington, D.C. trade policy community speculated over
who would be named by newly elected President George Bush to the post of U.S.
trade representative. During this period, Carla Hills’s name never appeared in
the American press. But in Tokyo, the insiders already knew. One week before the
appointment was announced, a Japanese official bragged to an American friend
that “thelady” who would be named was “most acceptable” to Japan. Two days
before the appointment was announced, a Japanese newspaper, the Nihon Keizai
Shimbun, broke the story in Tokyo.
Today Japan can boast the best political intelligence system in the United
States. One of the most important functions of the lobbyists and public
relations firms hired by the Japanese is to keep a steady flow ofcurrent
information streaming back to Tokyo. According to Herbert E. Meyer, vice
chairman of the National Intelligence Council during the Reagan administration,
“Every branch office of every trading company operates like an information
vacuum cleaner, sucking in information.” Normally, the Japanese will assign
three or more companies to the task of analyzing the same problem or issue. The
redundancy allows them to discern the difference between tatemae — the official
story — and honne — the real truth. It also guarantees that they will know
more than any individual lobbyist and permits them to tailor their response to
the political circumstances, utilizing the firm or individual whose background,
skills,or personal relationship best fits the needs of the situation.
Japan’s intelligence operation extends, as well, to one of the most important
and least visible parts of Washington, D.C.’s policy arena — the staff. In the
1980s, as theeconomic stakes of political decisions escalated, the Japanese grew
to appreciate the influence of congressional and administration staff. Aides do
research,draft legislation, negotiate with constituents, contributors, and
special interests, and cut deals with their counterparts in Congress and the
executive branch. To come to terms with congressional staff, the Japanese
commissioned a major study of the role and career patterns of the 30,000 people
who fill these critical slots. As a piece of political intelligence, the study
is a remarkable chronicle of Japanese political strategy.
Commissioned in 1982 and published in 1984, the study, “Role of the
Congressional Staff in the U.S. Decision Making Process” was prepared by Japan’s
National Institute for Research Advancement.An example of Japanese thoroughness
and detail, it not only analyzes the operation of staff but also spells out
individuals’ educational backgrounds, age distribution, and levels of influence.
It flags the “key watching points” that require particular attention from the
Japanese and the importance of identifying “floating ideas” that are most likely
to capture staff support. Most important, the study emphasizes the need for
Japan to win over those staff members who presently are powerful and most likely
will become even more powerful. In particular, the study targets young lawyers
on the Senate Finance Committee as likely prospects to move into influential
To implement the study’s findings, the Japanese began to court congressional
staff systematically. The Japanese embassy assigned four officials to get close
to key congressional staff members — to learn about their backgrounds, personal
ambitions, connections, and positions on important issues. The Japanese also
made a point of wining and dining these staff members, each year inviting
staff-level trade specialists to parties, lunches, dinners, and, increasingly,
to all-expenses-paid fact-finding trips to Tokyo. While these trips and other
contacts undoubtedly serve useful purposes for staff, they serve other purposes
as well. After congressional staff members leave service in the U.S. government,
they are increasingly going to work for Japanese clients and Japanese companies.
Because Japanese businesses hire so many senior insiders and coordinate their
collection of information so effectively, the Japanese actually have a better
overview of what is happening in the federal government than all but a handful
of those who serve in the administration. And by having more and better
information on the inside workings ofthe government, the Japanese are able to
affect a decision before most people even know that there is a decision to be
In 1988, for example, duringthe final negotiations of the Omnibus Trade Act,
a member of the House Ways and Means Committee received a call from an official
in the Japanese embassy, lobbying him over a provision of the just-passed Senate
version of the measure, which the committee would take up the next day. None of
the members of the committee had yet obtained a copy of the Senate draft — as a
courtesy and to facilitate its lobbying, the Japanese embassy had a copy hand
delivered to the congressman.
Lobbying and Influencing Policy.
To put the intelligence they gather to good use, Japanese companies excel at
the next phase of politics, gaining access to the policymakers. In Washington,
D.C., access and influence go hand in hand; they are the stock-in-trade of the
lobbyist, the lawyer, and the political adviser. They are, as well, the one
“skill” that current office holders and staff members can take with them when
they leave the government (see the insert “How to Make an American Governor a
Consider a recent case involving the 1990 U.S.-Japan Super 301 talks on
bilateral trade in high technology. During the negotiations, Fujitsu Ltd., one
of Japan’s largest electronics companies, hired David Olive, one of the State
Department’s principal experts on the substance of the talks, to be a senior
representative in its Washington, D.C. office. Olive had helped draft State
Department position papers, attended interagency meetings, had access to
confidential information shared by U.S. companies, and knew the U.S. negotiating
strategy for such critical high-technology industries as semiconductors,
telecommunications, and supercomputers. The U.S. State Department defended
Olive’s job change as “…in accord with applicable U.S. laws and regulations.”
Nevertheless, whether intended or not, the Japanese gained two important
advantages over their U.S. rivals by this one hire: they secured the services of
an individual with a finely honedsense of political possibilities, and they
sowed distrust among American companies about whether to share information with
their own government.
The easiest way for Japanese and other foreign interests to gain access and
establish influence is simply to pay for it. Generally, an insider is hired as a
lobbyist.If the former official wants to avoid the embarrassment of having to
register as a “foreign agent,” the arrangement can be changed to that of
“consultant” or”member of an advisory board” of an agency or company. As the
economic stakes have grown, the Japanese have added yet another lure to attract
U.S. governmentofficials — an equity position in a business deal, with the
prospect of substantial and ongoing returns. The transaction is a simple
equation: equity for influence.
The sums of money from Japan are so large and the absence of ideals in
Washington, D.C. so complete that a substantial number of U.S. public officials
are dramatically altering their career paths in the federal government–as well
as their decisions while in office. One former U.S. trade negotiator puts it
bluntly: “When people in government get ready to leave, they know where the
money is. It’s with the Japanese. Nobody who’s looking at an opportunity to make
$200,000 or more a year representing a Japanese company is going to go out ofthe
way to hurt them while in office.”
The influence of Japanese money is so pervasive that there is even a name for
it: the demonstration effect. The huge sums of money made available to Japan’s
friends once they leave office “demonstrate” the value of a friendly Japan
policy to officials still in office. Some Americans even try to prequalify for a
position as a lobbyist for Japan by offering “golden nuggets” of inside
information to Japanese corporate or government officials as evidence of their
When it comes to the demonstration effect, nothing rivals the example set by
Japan’s most recent politicalcoup: the hiring of former President Ronald Reagan
as a Japanese public relations shill. In October 1989, former President Reagan
hired himself out to Fujisankei Communications Group, a $5.5 billion
conglomerate then headed by its founder, Nobutaka Shikanai, a right-wing,
controversial tycoon who owned Japan’s largest radio network, a national
newspaper, and the country’s most successful television chain.
For $2 million, America’s former chief of state went to workfor Fujisankei
for one week. He made two 20-minute speeches, gave exclusive interviews to
Fujisankei’s newspaper and television stations, and, in the process, parroted
the Japanese line about U.S.-Japan trade frictions. The bilateral trade
friction, Reagan told the Japanese, was America’s fault, caused by “trade
protectionists” in Washington — whom he “had to fight every day.”
That was the message of Reagan’s trip to the Japanese; the message to public
officials back in Washington was different. To them Reagan’s $2 million trip was
the pinnacle of the demonstration effect — proof that anyone can be bought by
the Japanese if the price is right and permission for others to do the same.
After all, if aformer president can go to work for the Japanese, why not a lower
level bureaucrat? That, despite the fact that it would be inconceivable for
Yasuhiro Nakasone, Margaret Thatcher, Helmut Kohl, or Francois Mitterand, after
retiring from public office, to accept money from a U.S. company to do a public
endorsement or to advance its national standing.
Funneling money to politicians after they leave office works at one end of
the political value-added chain. An even more important activity is to funnel
money to them at the front end, to help themget elected in the first place.
While U.S. election law prohibits a foreign national from making a direct or
indirect contribution in any local, state, or federal election, foreign-owned
companies in the United States are allowed to operate political action
committees (PACs) and to make political contributions as if they were U.S.
corporations. In the 1980s, more than 100 foreign companies — primarily from
Europe and Canada — used this legal loophole to play a direct andinfluential
role in American politics. The Japanese use a more subtle technique; they
encourage Americans with whom they have important business links to make
political contributions to pursue their shared political interests.
The most visible, successful, and controversial example is the Auto Dealers
and Drivers for Free Trade PAC — AUTOPAC. As an industry, automobiles today
account for $28 billion of the $49 billion bilateral U.S.-Japan trade deficit;
therefore, it is an economic issue worthy of strong political involvement by the
Japanese and other auto-exporting nations. Just how strong was vividly
demonstrated in the 1988 elections. Using a fund-raising formula of $2 per every
car sold or $5,000 per year, the foreign auto dealers of AUTOPAC raised $4.5
million, making AUTOPAC one of the top PACs in the United States. Of that $4.5
million, AUTOPAC dumped $1.4 million into just seven congressional races,
elections where AUTOPACpicked a candidate who favored an open American market —
the single issue of critical importance to the industry.
One such race was the Senate contest in Florida between Democrat Buddy McKay
and Republican Connie Mack. In a statewideelection decided by only 31,000 votes,
McKay lost — in large part because of $326,000 spent by AUTOPAC on negative
television commercials in the last days of the campaign. Looking back on the
election, McKay says, “In the final analysis,I was not beaten by Connie Mack. I
was beaten by Tokyo.”
Political action committees like AUTOPAC are only one device for influencing
U.S. politics. Another favorite Japanese technique is the use of an existing
organization or the creation of an ad hoc coalition — an association of U.S.
members that allows Japanese interests to put an American face on their
politicking. One example of this approach is a Washington, D.C.-based public
interest group, Consumers for World Trade (CWT). Since the early 1980s, CWT has
been one of Washington, D.C.’s most avid advocates of unrestricted free trade;
its arguments focus on the benefits free trade affords the American consumer.
The organization has steadfastly opposed any reciprocal trade law that would
threaten Japan with restrictions onaccess to the U.S. market as a way to pry
open the Japanese market. In 1987, CWT organized a grass roots campaign against
what it labeled the “protectionist”features of the pending Omnibus Trade Act of
1988; CWT testified in front of congressional committees six times, each time
arguing the case for U.S. consumers and against tough trade sanctions aimed at
the closed foreign markets, most notably the Japanese.
Starting in 1980, the Japanese began to take a deep interest in CWT. Again,
the Japanese automakers led the way. Subaru, for example,paid the initial dues
for 1,500 of its employees to become members; in November of 1980, Subaru
employees represented more than half of CWT’s 2,700 members. Toyota and other
Japanese companies made direct corporate contributions. By staying in the
background, they did not jeopardize the American face of CWT. Nevertheless, when
the Japanese infiltration of CWT came to light, U.S. Senator JohnHeinz termed it
“an underhanded and dishonorable way for the Japanese to try to influence public
But the most effective lobbying technique reflects the current tangle of
global politics and economics. It is the high art ofcreating a captive
competitor. The story of John Young, CEO of Hewlett-Packardand one of America’s
most respected senior managers, makes the point. In 1983,the Reagan
administration created the President’s Commission on Industrial Competitiveness
and named John Young to be its head. Given the Reagan administration’s
unyielding laissez-faire ideological bent, most Washington, D.C. insiders
considered the commission to be little more than a political fig leaf — a
protective cover for the 1984 election in case Walter Mondale were somehow able
to make the issue of competitiveness come alive. Predictably, after the
election, the Reagan administration tried to vanish the commission and its
report, releasing it in an obscure Commerce Department office rather than the
White House and printing the absolute minimum number of copies.
But John Young was not so easily dismissed. While insiders might have written
off the commission, Young took the issue seriously. He saw to it that the
commission issued a first-class piece of work; its findings and recommendations
have subsequently framed much of the ongoing debate on the issue. And when the
report died within the administration, Young championed the issue on his own. In
1987, he supported sympathetic members of Congress who set up the Congressional
Competitiveness Caucus; working with other corporate leaders, he spearheaded the
creation of the Council on Competitiveness, which he currently heads.
But in 1987, another event occurred: the Toshiba Machine Company, which is
50% owned by the Toshiba Corporation,was found to have sold sensitive technology
to the Soviet Union — technology that would allow Soviet submarines to escape
detection by the United States Navy.Congressional reaction was swift and fierce:
in June 1987, the Senate voted 92to 5 to impose sanctions on Toshiba; the House
was prepared to vote to ban thesale of all Toshiba components in the United
States for two years.
And suddenly John Young, champion of U.S. competitiveness, found himself
forced to usehis Washington lobbyists on behalf of Toshiba — because
Hewlett-Packard, like so many American high-tech companies, simply could not do
business without Toshiba’s components. In a textbook example of “leverage
lobbying,” Toshiba, the Japanese supplier, used the leverage of its strategic
components to get its U.S. customers, including Hewlett-Packard, to lobby
Congress on its behalf. The U.S. companies had become Toshiba’s captive
Grass Roots Politicking.
It is a guiding principle of American political life that all politics is
local. It is a principle that the Japanese have been quick to grasp, building an
extensive coast-to-coast network of politics at the grass rootslevel across
America. And it is a principle best put into practice by the Electronic
Industries Association of Japan (EIAJ) and Sony’s Akio Morita.
In a June 1985 presentation to the members of EIAJ, which is made up of
Japan’s 600 largest electronics companies, Morita explained that U.S. criticism
of Japan “is not due to a misunderstanding of and prejudice against Japan, but
rather to certain political intentions.” In response, Morita said, Japan needed
to mount agrass roots political campaign in the United States, a campaign that
“should not stop with PR within the electronics industry but…should expand PR
activities to the mass media, consumer groups, and political groups on the state
Going further, Morita next laid out an extensive list of political activities
for EIAJ’s grass roots campaign. The program would consist of:
Managing debates and seminars at the state and local level;
Staging local events with Japanese plants and factories;
Publishing local newsletters and magazines;
Creating exchange programs with state universities and think tanks;
Establishing links with state economic development offices, local chambers of
commerce, and the local offices of federal elected officials;
Organizing exchanges with consumer groups at the local level; and
Operating student exchanges.
To weld the campaign into a coherent whole, Morita proposed a unified message
that would be repeated in every locality: Japanese investment createsjobs;
Japanese companies rebuild depressed U.S. communities; Japanese companies
satisfy U.S. consumers; the Japanese and U.S. economies are intertwined.
Before launching the campaign on a national basis, EIAJ decided on a pilot
project. It hired the Washington, D.C.-based political consulting firm of Matt
Reese & Associates to help test the program in a single state: Tennessee.
Tennesseewas an attractive test site for several reasons. By 1987, Japanese
companies had established 47 facilities, employing 10,000 Tennesseeans, a full
10% of Japan’s total U.S. manufacturing investment. And in the early 1980s,
Japan had already begun public relations and educational efforts in Tennessee,
leading to university-based Japan centers, special programs in the school
districts of the state’s four major cities, and the formation of a
Once the Japanese had targeted Tennessee, the campaign swung into motion. A
new local organization was created, the Tennessee-Japan Friends in Commerce
(TJFC). The organizers recruited three non-Japanese cosponsors: the state
government; the Japan Center of Tennessee, located at Middle Tennessee State
University in Murfreesboro; and the Japan-Tennessee Society. For the most part,
however, all the cosponsors put up was their names; two-thirds of the budget for
the organization came from the EIAJ and its member companies, particularly
Toshiba, Sharp, and Matsushita.
To add legitimacy and an American face to the organization,former Lt.
Governor Frank Gorrell was hired to take the position of chairman. To create
membership, Matt Reese & Associates identified several thousand Tennessee
opinion leaders, who were then invited to join.
As an initial test, TJFC sponsored three forums in Nashville, Knoxville, and
Memphis. In attendance were Tennessee Governor Ned McWherter, other state
elected officials, business executives, and academic leaders. The message: the
importance to the Tennessee economy of the “friendship” between the people of
Tennessee and Japanese companies. The keynote speaker: Akio Morita.
In his speech, Morita lamented the fact that politics was responsible for
disturbing the otherwise superbly functioning economic relationship between
Japan and the United States. He told the crowd, “At a time when the relationship
between our two nations has become inextricably intertwined, it is most
unfortunate that things that bear on the relationship…have become so
Things were about to become even more politicized — and the pilot project
was about to be put to a test. The Toshiba controversy broke out in the middle
of the series of public forums, creating a real political emergency. Tennessee
responded. Toshiba supporters across the stateand state-level elected officials
led by Governor McWherter pressured the Tennessee congressional delegation not
to impose sanctions on the Japanese company — which happened to be a major
Tennessee employer and contributor to TJFC. Remembering the episode, one
Tennessee congressman said, “My arm was twisted so hardthat I feel lucky to have
In the end, the EIAJ deemed the experiment a success. The forums served to
establish useful contacts for EIAJ with state opinion leaders; EIAJ’s message of
the benefits of Japanese investment had been conveyed in a credible fashion; and
the forums had given Toshiba an opportunityto communicate its importance to the
people and economy of Tennessee. In the wake of the Tennessee test, the Japanese
made the determination to take the campaign national.
In 1988, the Keidanren, with Morita again in the lead, formed the Council for
Better Investment in the United States — later renamed the Council for Better
Corporate Citizenship in the United States, an organization with the avowed
purpose of helping Japanese companies become fully integrated “into American
society.” The nationwide effort aims to win public favor and goodwill through a
massive program of charitable donations and highly visible public relations
activities. What makes the donations troubling, however, is the fact that
Japanese companies have no tradition of charitable giving, either at home or
abroad. They generally combine charity and political contributions into one
accounting line on the balance sheet. Now the Japanese government is pressuring
them to make large, public contributions to defuse the mounting hostility in the
United States toward Japan’s economic strategy.
At the same time, Japanese companies have carefully spread their investments
in new plants and facilities for maximum political advantage with the U.S.
Congress. To muzzle congressional critics, the Japanese sited plants in targeted
districts; seven facilities have gone into the district of Georgia Congressman
Ed Jenkins, a persistent critic of Japan’s closed markets. Japanese plants have
also been placed in the samedistrict as U.S. competitors in an effort to “share”
the elected official and neutralize the rival’s political influence. By 1990,
the Japanese had successfully established a formidable, fully functioning grass
roots political infrastructure throughout the United States.
The mission of Japanese propaganda is simple: to persuade Americans to adopt
favorable views toward Japan. Through propaganda, the endless repetition of
their six messages, the Japanese have successfully stifled criticism of their
own nationalistic approach to economics and shaped the prevailing U.S. view of
Japan and global economics.
Japanese propaganda is effective primarily because it is delivered by highly
credible spokespersons — most of them Americans. Some are long-standing experts
on Japan, dubbed the Chrysanthemum Club by their critics;others are academics,
members of think tanks, and journalists, often with a free-trade ideological
bent. While most of them hold their views honestly, almostall are stroked,
supported, and promoted by the Japanese, who recognize the enormous value of
having earnest American defenders who will make Japan’s case.
The Chrysanthemum Club, named after the floral symbol of Japan’s imperial
family, draws its membership from Americans with an intellectual, personal, or
business stake in Japan. Most prestigious and influential are the long-standing
members of the U.S. foreign policy establishment, the diplomats who, in many
cases, helped forge the post-World War II U.S.-Japan relationship. Now these
same individuals are hard at work trying to defend Japan to Americans and to
preserve “the relationship” — and the work of their careers (see the insert
Also in the foreign policy category of Chrysanthemum Club members are
entrenched Defense Department officials, unreconstructed cold warriors who give
little weight to geoeconomics and continue to place enormous emphasis on the
importance of maintaining American military bases in Japan. To them, national
security is defined only in military terms; economic friction should not be
permitted to jeopardize the geopolitics of the U.S.-Japan relationship. Other
members of the Club are free-trade ideologues and U.S. corporate leaders who do
not want to see criticism of Japan change the existing rules of commerce between
the two nations.
It is this defense of the economic status quo that marksthe members of the
Club. Kevin Kearns, a former U.S. diplomat who served in Tokyo during the late
1980s, wrote in the Foreign Service Journal, the professional journal for
foreign service officers, that Chrysanthemum Club members “somehow fail to see
the trail from predatory Japanese policies to lost markets, to destroyed
industries, to large outflows of wealth in the form of trade deficits,and
finally to the resultant decline of American power and
influence….Chrysanthemum members seem to see their function not as
representing U.S. interests but as balancing the demands of both sides…to make
the increasing Japanese domination of the U.S. economy as painless a process as
possible for our institutions and the American people.”
A second major instrument for Japanese propaganda dissemination is U.S.
universities and think tanks, a majority of which depend on significant Japanese
funding and Japanese access to operate their Japanese studies programs. In turn,
the Japanese recognize that these institutions craft many of the ideas and
conduct many of the studies that shape American opinion on trade and economic
policy. Almost without exception, Japanese contributions support the work of
those who advocate neoclassical laissez-faire trade policies. These views are
genuinely held; the Americans who argue for this approach would make the same
arguments with or without Japanese financial assistance. What the Japanese hope
to accomplish through their support of these people’s work is to amplify it,
sustain it, and give it added influence in the highly competitive marketplace of
ideas. Moreover, since ties to and support from Japan are often obscured or left
unreported, the question of objectivity goes unasked.
American academics typically line up on every side of every issue. But in the
case of the U.S.-Japan relationship, more than simple intellectual disagreement
has come into play. The Japanese exercise extraordinarily tight control over
access to information within Japan. In more than one case, U.S. scholars,
academics, and students who have been critical of Japan have found their
research efforts jeopardized or made more difficult. Conversely, friends of
Japan can find that most obstacles are swiftly removed. Another consideration is
money. It takes a great deal of money to run a major Japan studies program —
and the Japanese are much more inclined to contribute substantial sums to those
whose academic research supports their interests and substantiates their
American academics have also emerged as the leading critics of the
“revisionists” — particularly Karel van Wolferen, Clyde Prestowitz, Chalmers
Johnson, and James Fallows — who advocate changes in the U.S.-Japan
relationship. For example, George R. Packard, who is the dean of the School of
Advanced International Studies (SAIS) of Johns Hopkins University, has publicly
labeled van Wolferen “a hoax” and attacked the writing of Prestowitz and Fallows
as threats to the U.S.-Japan relationship. Packard’s program at SAIS is one of
the leading academic centers for U.S.-Japan studies; it has been a regular
recipient of Japanese funding.
Undoubtedly, Packard comes to his views honestly. And the Japanese come
tothem eagerly, ready to broadcast them to gain political advantage. For
example, the February 1989 issue of The Atlantic carried a 16-page special
advertisingsupplement paid for by major Japanese companies. Called “Partners in
Prosperity,” the supplement contained advertorial messages from Mitsubishi,
Brother, Canon, Ricoh, and other Japanese companies, featuring titles such as
“Toyota USA: An American Phenomenon.” But the major element was an essay by
George Packard, which argued that the United States and Japanese economies and
cultures have been transformed “into one nearly seamless web of
In the area of trade, Packard concluded, any differences between the two
nations are “more than compensated for by the clear and well-recognized benefits
that each nation draws from the partnership.” On the Japanese side, Packard
chalked up access to the wealthiest market in the world, to which Japan sends
40% of its exports; access to U.S. scientific and technological advances
“through various arrangements”; ability to rely on the United States for defense
— which means a lower level of military and defense expenditures and benefits
such as an uninterrupted oil supply from the Middle East.
On the U.S. side, Packard listed: accessto military bases in Japan; $7
billion in annual agricultural exports to Japan; access to Japanese management
techniques and technological innovations; and U.S. consumers’ access to Japanese
products. Pared to its essentials, the list represents the U.S.-Japan trade
relationship: Japan gets to send its products tothe U.S. market; Americans get
to buy them.
Nowhere does Packard mention Japan’s $50 billion annual balance of trade
surplus. Rather, his addition of thebenefits enjoyed by each side leads him to
conclude: “Thus the partnership hasbeen firmly rooted in mutual interests” —
the kind of conclusion that the Japanese argue repeatedly and are only too happy
to have Americans make for them.
The third channel for carrying Japanese propaganda is the U.S. media, which
Japan affects in two ways: financing programs that are presented over the
airwaves and influencing the content of journalists’ reporting on Japan. Since
the early 1980s, Telejapan and the Japan Center for Information and Cultural
Affairs (JCICA) have sponsored television and radio programs in the United
States, producing shows for the Christian Broadcasting Network, the USA Cable
Network, the Cable News Network, and public television stations. Both Telejapan
and JCICA are directly linked to the Japanese government. Telejap affiliated
with the Ministry of International Trade and Industry. JCICA works with the
Foreign Ministry, which has had to approve the release of funds for at least one
of the JCICA’s television projects.
In 1986, MITI went even further in its attempt toinfluence the American
public’s view of Japan: it established the Moonlighter Project, a $200,000 fund
to pay moonlighting U.S. reporters directly. As reported in the Mainichi
Shimbun, MITI’s initial plan was to put on the Japanese payroll one reporter,
editor, or local chamber of commerce director in each of 10 states. Missouri and
Michigan, home to three of Japan’s leading critics — Congressmen Richard
Gephardt and John Dingell and Senator Donald Riegle — were among the test sites
chosen. If the test worked, MITI would extend the program to include more
journalists and states. The purpose of the project, as defined by MITI,was to
have journalists collect information that would help Japanese companiesexpand in
the United States and to “conduct PR on Japan’s market-opening measures.”
The program collapsed when Congress learned of it. Senators John Heinz,
Donald Riegle, and Frank Markowski wrote angry letters to the U.S. secretaryof
state, the U.S. attorney general, Japan’s prime minister, and the Japanese
ambassador in Washington, D.C. Riegle denounced the program as “particularly
insidious because it is designed to contract with influential Americans so the
Japanese can make use of their personal contacts, reputations, and positions in
local communities….MITI’s plan shows that the Japanese government, despite
itspromises to correct sources of trade tension between the two countries,
continues its strategy of temporizing and distracting American public opinion
while actively worsening the already dangerous bilateral trade imbalance.”
Japan Educates the United States. Japan’s most
forward-reaching political program is aimed at U.S. educators and students. Its
goal is to shape whatfuture generations of Americans think and know about Japan
— including rewriting the history of World War II to omit Japan’s atrocities
against occupied nations and prisoners of war and to explain the war in the
Pacific as a consequence of the U.S. decision to cut off Japan’s supply of steel
The Japanese government began its effort to influence America’s educational
system in 1978, when it commissioned West Coast-based consultant Charles von
Loewenfeldt to develop a strategy to shape what elementary and high school
students in the United States are taught about Japan. Von Loewenfeldt’s advice:
the best way for Japan to reach the students was first to teach the teachers.
Soon the government of Japan launched its education program by offering
elementary and secondary school social-studies teachers all-expenses-paid tours
of Japan — “invitational diplomacy” designed to give the teachers a carefully
prepared, stage-managedimpression of Japan. These tours are almost always the
same: they begin with avisit to historic, charming Kyoto; next they go to
Shikoku, one of the main islands, where teachers stay with selected families for
several nights; then theygo to Hiroshima Peace Park, which retells the history
of World War II and America’s dropping of the atomic bomb from the Japanese
perspective; then to Osaka to see modern Japanese industry; and finally, to
Tokyo to see the famous Japanese juku, or cram schools.
When the teachers return to the United States, they are expected to write
trip reports and are encouraged to give talks in theirlocal communities to
“explain” Japan back home. An aide to von Loewenfeldt describes the real purpose
of the program: “One teacher who has visited Japan can infect hundreds, even
thousands, of other teachers with his or her enthusiasm.”
To help spread the “infection” even further, the Japanese have financed the
production and distribution of teaching materials: handbooks, lesson plans,
videotapes, and other instructional supplies. Of course, these teaching
materials present history and economics from Japan’s point of view. For example,
according to one workbook, Japan invaded China because of American and European
racist insults directed toward Japan after World War I. Another text explains in
great detail the U.S. role in causing the war in the Pacific, including U.S.
actions that drew Japan to attack Pearl Harbor.
In economics as well, Japanese-sponsored material carries familiar Japanese
propaganda as if it were established academic fact. Teaching guides either
dismiss the U.S.-Japan bilateral trade imbalance as a matter of little
consequence or, alternatively, blame it on U.S.business, workers, and
government. One text teaches, “According to economic theory, we do not need to
worry about trade imbalances because market forces cause them to disappear.” The
guides explain away Japan’s protected markets as necessary: since “Japan is a
small island country with no natural resources,” it must have a trade policy
that will guarantee supplies of food and energy and cashreserves with which to
buy necessities on the world market (see the insert “Japan is Different”). Why
the United States and other nations have no similar need is not mentioned or
In the 1980s, the Japanese extended their educational effort through a $2
million per year “Program for Teaching About Japan.” The program concentrated on
social studies — economics, history, trade, and U.S.-Japan relations — and was
designed to make it easy for teachers to offer prepackaged lessons on Japan;
videotapes, sample lessons, student handouts wereall provided. As one
high-ranking official in the Japanese Foreign Ministry said in an interview,
“I’m not worried about U.S.-Japan relations in a decade. Bythen, the next
generation of Americans will think differently about Japan.”
America’s Politics, America’s Future.
Japan’s campaign for the United States is completely legal. It plays the
American economic game by American rules. It uses the campaign tactics and
methods of American politics. Ithires Americans to lobby, educate, and influence
other Americans. It is the highest stakes political-economic game in the world
today, affecting whole industries, billions of dollars, millions of jobs, and,
ultimately, the wealth and power of nations.
It is also deeply corrosive of the U.S. political and economic system. The
revolving door of Washington, D.C. breeds cynicism and mistrust. It ultimately
represents a form of political corruption — completely legal, completely
unethical. The problem, of course, is not in Tokyo, but in Washington,D.C.
Americans have all but lost sight of some of the most basic lessons of civics
— chief among them the guiding concept of civic virtue. The value of national
service — for an individual to be of service to the country and to work on
behalf of the country’s interests — has been cheapened by a more mundane coin
of the realm: personal advancement, self-interest, big money. As a
consequence,the United States is not only selling corporate assets and real
estate to foreign bidders; also for sale is U.S. integrity and national honor.
The revolving door must stop. Those who hold top federal positions, such as
director of the Central Intelligence Agency, U.S. trade representative, and
secretary of state, should be permanently prohibited from becoming foreign
agents or paid lobbyists for any corporation — foreign or domestic. For lower
level federal office holders, there should be a longer “cooling off” period
between their departure from government service and their availability to lobby,
counsel, or advise on trade matters. As of January 1991, federal law will
require a one-year waiting period; five to ten years would represent a more
substantial safeguard of the public interest.
In a democracy, the best disinfectant for corruption is sunshine. All foreign
agents — those who represent foreign clients, whether lobbyists, journalists,
academics, public relations advisers, political strategists, lawyers, or
foundations — should provide full disclosure to the Justice Department. No
exceptions. Foreign companies should be flatly prohibited from participating in
and contributing to U.S. elections. Money politics is bad enough; foreignmoney
politics is out of the question.
Moreover, where it is legal and ethical for companies to hire former elected
officials, U.S. corporations should recognize the new reality of global
competition: politics is a source of competitive advantage. U.S. companies must
accept and participate in both the reforms of the corrupt practices that now go
on — recognizing that domestic corruption is every bit as destructive as
foreign corruption is — and the legitimate pursuitof political advantages.
Japan’s campaign for America should serve as a powerful wake-up call to U.S.
business leaders that politics is a critical component of corporate strategy. In
Washington, D.C., in state and local governments,in school districts across the
country, politics not only shapes public opinion and perception but also drives
outcomes in terms of real products and services in the marketplace.
Significantly, this holds true in Tokyo as much as in Washington, D.C. And yet
in the home market of American companies, the Japanese have proven more
effective than their American rivals in seizing the political advantage.
Moreover, most U.S. companies, if they do business in Japan, regard the Japanese
government as an alien and external entity and depend almost solely on the
American embassy for political advice and counsel. Whether in Tokyo or
Washington, the lesson is the same: companies can create political advantage
that goes beyond the conventional boundaries of company strategy. Indeed, the
political and economic dimensions are inseparable.
Finally, it is up to American business leaders and the American people to
demand a higher standard of conduct from their elected and appointed
representatives. Companies that are accustomed to the requirements and
strictures of the Corrupt Foreign Practices Act should now demand a U.S. version
— a Corrupt Domestic Practices Act. The manipulation of the U.S. political and
economic system by foreign interests with the willing and eager participation of
Americans-for-hire threatens America’s national sovereignty. It threatens
America’s future. It goes on only because Americans tolerate it. Americans are
the only ones who can stop it.
Copyright 1990 President and Fellows of Harvard College