The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the day's news, we'll look at President Bush's mission to Tokyo and the political and economic questions about the way Japan does business with the United States. The comes Part 2 of Paul Solman's series on U.S.-Japan relations. Tonight: How the Japanese view us. We close with a Charles Krause interview about missing Americans in Vietnam with former KGB official Oleg Kalugin. NEWS SUMMARY

MR. MacNeil: President Bush was talking tough on trade today as he arrived for a three-day visit to Japan. He said he wanted an increase in access for American goods and services in Japanese markets. The President attended the opening of a Toys R Us Store in Kashihara, Japan. He said the outlet was an example of how Japanese barriers to trade could be overcome. Mr. Bush said freer trade would be good for both Japan and the United States.

PRES. BUSH: Each partner must realize that it benefits from free trade in open markets. Our economic relationship is not a zero sum game for either side. And though we're pleased at the success so far, we're not satisfied with just reaching these piecemeal trade agreements. In the cause of free and open trade, we want agreements that produce permanent improvement in access and in U.S. sales to Japanese markets and permanent improvement in the lives of Japanese consumers.

MR. MacNeil: Japan's second largest automaker today announced the type of concession President Bush is seeking. Nissan said it would sell up to 3,000 Ford mini-vans and other U.S. vehicles in Japan for a year. The chairman of the big three automakers and other top U.S. business leaders met today with their Japanese counterparts. Chrysler Chairman Lee Iacocca said they weren't looking for handouts, but a change in the basic trading relationship between the two countries. We'll have more on the U.S.-Japanese trade right after the News Summary. Jim.

MR. LEHRER: A European Community helicopter was shot down in Yugoslavia today. Five EC truce monitoring personnel aboard were killed. It happened near the croatian capital Zagreb. Croatian officials say a federal warplane attacked the helicopter with missiles. We have a report narrated by David Simons of Worldwide Television News.

MR. SIMONS: The European Community helicopter crashed in a field in Northern Croatia. It was carrying five EC observers, four Italian and one French. All were killed. Immediately after the incident, Croatian officials reported that the helicopter was hit by an air-to-air missile fired by a federal air force plane, but it was several hours before the federal forces admitted responsibility for the attack. The observers were flying from Belgrade to Zagreb in a bid to maintain the fragile cease-fire agreement signed last Friday. A second companion helicopter was also attacked but it landed safely a few miles away. Nobody aboard was injured.

MR. LEHRER: Yugoslavia's federal defense ministry said in a statement it regretted the attack and would take action against those responsible. In Washington, State Department Spokeswoman Margaret Tutwiler called the incident a blatant violation of the cease-fire. There was more fighting in the capital of the former Soviet republic of Georgia. Rebels who yesterday succeeded in ousting the president today opened fire on protesters in the capital, Tblisi. Two people were injured. It happened after several thousand people gathered for a rally in support of the president. The ruling military council had banned demonstrations in the capital. Its leaders admitted ordering the crowd to be dispersed and said they would do it again.

MR. MacNeil: Arab officials said today they will return to Washington to resume peace talks. The announcement followed last night's unanimous vote by the U.N. Security Council strongly condemning Israel for the deportation of Palestinians from the occupied territories. Last week, Arab delegations said they would boycott the Washington peace talks, because Israel had announced 12 new expulsions. A Palestinian spokesman said the U.N. actions saved the peace process. In Gaza today, Israeli forces fired on a crowd of Palestinians protesting the deportations. One person was killed, twenty others wounded.

MR. LEHRER: Postmaster Gen. Anthony Frank announced his resignation today. He said he would become chairman of a San Francisco biotechnology firm. During his four-year tenure at the Postal Service, he increased automation, thus reducing costs and cutting 40,000 jobs. Sears Roebuck announced a new computer cash register system today that will eliminate nearly 7,000 of its jobs. A company spokesman said it is expected to reduce operating expenses by $50 million a year. He said most of the employees affected would be transferred to other positions in the company.

MR. MacNeil: That's our News Summary. Now it's on to trade and the President in Japan, Paul Solman on U.S.-Japanese relations, and Vietnam MIAs. FOCUS - TRADE TREMOR

MR. LEHRER: First tonight President Bush's mission to Tokyo. He's there with an entourage of American business executives, especially Detroit's outspoken automakers, in an attempt to change the way Japan does business with the United States. We have four views of this mission following this backgrounder from Roger Mudd.

MR. MUDD: If President Bush feels at home in Japan, that may be the problem. So many Japanese-made cars and trucks drive by the White House every day that it's a daily reminder to the occupant of 1600 Pennsylvania Avenue that America has a massive trade deficit with Japan. Nothing else more dramatically symbolizes our economic troubles than thousands of Americans driving Japanese imports. The 1991 estimate reveals that the United States is now struggling with a $41 billion trade deficit with Japan. That overall figure is somewhat less than it has been in the past several years. But that part of the deficit due to the imbalance in the automotive industry has increased steadily. As a result, the American auto industry is now a shell of what it once was. The 1991 sales figures released yesterday showed that the Japanese Honda was the best selling car in America for the third year in a row and that the big three American automakers, General Motors, Ford and Chrysler, had had their worst year since 1983. Because of record losses during the first three quarters of last year, GM announced in December it would be eliminating 74,000 jobs and closing 21 plants.

ROBERT STEMPEL, Chairman, General Motors: [December 18, 1991] The dramatic loss of consumer confidence and reduced industry automotive sales have been more persistent than expected.

MR. MUDD: General Motors Chairman Robert Stempel is one of twenty-one corporate executives who, however reluctantly, accepted President Bush's invitation to help press the trade issue in Japan. Originally, of course, trade was not to be the big issue of this trip. It was to have been international security in a post cold war world. But just before President Bush was scheduled to leave Washington in November, he got an unexpected and disquieting message from the voters of Pennsylvania.

HARRIS WOFFORD: The first Democratic Senator in 23 years reporting for duty.

MR. MUDD: Harris Wofford, almost a political unknown in his own state, was elected to the United States Senate, defeating the President's hand-picked candidate, former Governor and former U.S. Attorney General, Richard Thornburgh, and Wofford did it by hammering away at the worsening economy, particularly the loss of jobs. President Bush, with fresh opinion polls revealing his vulnerability on domestic issues, promptly cancelled his foreign trip.

PRES. BUSH: I have told you I don't live and die by the polls. Yes, I will refrain from pointing out that we're not doing too bad in those polls. What matters is that people are hurting and let's try to solve the problems for the American people.

MR. MUDD: The President then rescheduled his trip for the New Year and also rearranged his priorities.

PRES. BUSH: I would say that the trip is to break down intransigence where we find it and have freer and fairer trade. And that message I will carry very, very forcefully.

MR. MUDD: President Bush is not thought to be in Japan to deliver ultimatums, but he is under political pressure to come home with some concessions. In Congress, there are Democrats who say they will take action if the President returns empty-handed.

SEN. DONALD RIEGLE, [D] Michigan: If Japan refuses to move to fair and open and reciprocal trade that eliminates this bilateral deficit, then the Japanese share of the U.S. market for cars will steadily be reduced in annual steps by a cumulative total of one million, two hundred and fifty thousand units over the next five years.

MR. MUDD: Five years ago, it was Presidential candidate Richard Gephardt who led the same campaign for retaliation against Japan during heated debate on a trade bill.

REP. RICHARD GEPHARDT, [D] Missouri: [1987] I've talked to business people. I've talked to labor people. They all say the same thing. Why should we go through all that pain if we can't sell our goods? And they cite chapter and verse of how they tried to get in other markets and they can't get in.

MR. MUDD: At the time, Gephardt called trade and regaining America's economic strength the issues of the 1988 campaign. It became Gephardt's battle cry, but it failed to rally many voters. And when a series of primary defeats on Super Tuesday collapsed Gephard's Presidential campaign, political support for the Gephardt "get tough on trade" amendment faded away. But tough times and tough talk on trade have returned and the Democratic Presidential hopefuls for 1992 jumped on both during their first debate in December.

DEMOCRATIC PRESIDENTIAL CANDIDATE: The time for fair trade is here, reciprocity.

GOV. CLINTON: We're going to have to have a clear understanding or retaliate.

PRES. CANDIDATE: I would tell the Japanese when I went to Japan in my term as President we are going to reduce that trade deficit to zero.

MR. MUDD: With Americans still losing jobs to foreign competition and with the economy dead in the water, protectionist talk is now in style. President Bush's problem in this election year is to show at least rhetorical respect for protectionism without actually abandoning his commitment to free trade.

MR. LEHRER: Now four views of this Japanese trade situation. Carla Hills is the United States Trade Representative. Congressman Richard Gephardt, who we just heard from or heard about, is the Democrat from Missouri, he's the House Majority Leader, he's the sponsor of two current trade bills now in Congress; he joins us from Capitol Hill. Clyde Prestowitz is president of the Economic Strategy Institute, a research organization in Washington funded by labor unions, foundations, businesses, including Ford and Chrysler. Mr. Prestowitz served as a trade negotiator in the Reagan Commerce Department. He's the author of the 1988 book "Trading Places: Giving Our Future to Japan." Jadish Bhagwati is professor of economics at Columbia University and economic policy adviser to GATT, the international trade organization. He's currently writing a book on Japan in the world economy. Amb. Hills, what should we expect President Bush to extract from the Japanese?

AMB. HILLS: He's there to highlight the importance of gaining export opportunity. Japan is the second largest industrialized market in the world. We've made enormous progress in the President's time in office in opening that market, but it's still not open. And we would like to have greater opening.

MR. LEHRER: Is it the administration's position that the Japanese people would buy American cars even though the American people don't buy them if the market was more open?

AMB. HILLS: We would like the Japanese consumer to have a full range of choices, not only of American cars, but of American pharmaceuticals, medical devices, electronic equipment, and let them make the choice, let them make the choice on the basis of price and quality.

MR. LEHRER: Is it the administration's position that Japan is, in fact, Japan's policies are responsible for a part of our economic problems here in the United States?

AMB. HILLS: We think that all nations should open their markets. That will keep our factories humming. That will keep jobs up. Exports are a bright spot in our economic picture and we want to keep exports up. That is the Bush administration's trade policy.

MR. LEHRER: Is there a connection between that trade policy and the economic hard times we're having in this country?

AMB. HILLS: What we would get by greater market openings are more jobs and it won't cure the recession but it will create jobs. And the President is very keen about ferreting out every export opportunity he can so that he can generate jobs. You've heard the figure. For every $1 billion worth of additional exports, we generate 20,000 jobs in this country. And our export jobs have gone up in the past three years, but the President wants them to go up further.

MR. LEHRER: Congressman Gephardt, is it just talk, or do you believe also that there really is a connection between Japanese people not buying American cars and the fact that we have a recession in the United States?

REP. GEPHARDT: Well, it's part of the picture, Jim. I think we get in trouble when we try to assign one cause for one problem. Obviously, there are lots of causes of our economic problems, but I think it's also wrong to say that trade is not an important part of the problem. And I think the President is doing the right thing by going to Japan, by taking these executives with him, and by trying to push and create pressure, especially on the Japanese private sector, to treat us more as we treat them, to give us a better crack at that marketplace, and to begin to negotiate for a share of that market which we're going to have to have.

MR. LEHRER: You mean negotiate government to government, to say to the Japanese, look, so many thousands or millions of American cars must be sold in Japan, or we will restrict a certain number of cars to be sold in the United States?

REP. GEPHARDT: I think if you don't set targets and negotiate in that way, you're never going to get enough pressure on the private sector in Japan which really controls these questions, to get a chance to actually sell your product. And I get a little put off with people who keep saying that this is America's problem alone. Two-thirds of the cars sold in the United States are United States cars. The Consumer Report I picked up the other day says that the best buy in most categories today is an American car, not a Japanese car. And I think if given a fair chance, which the President can negotiate and can get for our companies, we'll do fine.

MR. LEHRER: And under the legislation or part of the legislation that you now have before the House, is that if that does not happen, then you believe that retaliatory action should be taken against Japan, is that right?

REP. GEPHARDT: I just don't see any other way that you're actually going to get results, and in the past, when we have finally taken action, not just words, but taken action with regard to Japan, we get action on their side. And, remember, it's the private sector in Japan that you've got to affect. Their government officials will give you press releases and give you a lot of words, but it's the private sector that can actually bring about change. We have a semiconductor agreement which Clyde Prestowitz, who was on this program, negotiated. He had negotiated for a certain share of the Japanese market. We have never gotten that share, but we got more of a share than if we hadn't negotiated at all.

MR. LEHRER: Amb. Hills, how does the President and the administration feel about the Gephardt approach, which says Japan, do this, if you don't, we will do that to you in retaliation?

AMB. HILLS: As I understand the Majority Leader's legislation - - and I haven't read it, but I have read his press release about it -- is that it would go after balances rather than go after barriers. We've increased our manufacturing exports by 45 percent in three years by going after barriers. We brought Japanese barriers down. Japan is currently our second largest purchaser of products and so we think that what our prescription is for trade is working. Simply going after balances, we have a surplus.

MR. LEHRER: Balances meaning --

AMB. HILLS: Trade balances.

MR. LEHRER: Arbitrarily arrived at and then agreed to government to government and -- but the Congressman says government to government doesn't work, if you don't put the heat on the private sector in Japan.

AMB. HILLS: And we also put the heat on the private sector, because we say to the government we want to get after exclusionary business practices, anti-competitive practices. And when they go after those sorts of practices, the market opens, our exports go up, and we gain jobs.

MR. LEHRER: Mr. Bhagwati, in New York, what do you think about this whole approach, the President going over there, whether you do it the Gephardt way or you do it the Hills-Bush way, is this what the U.S. government should be doing to Japan right now?

MR. BHAGWATI: Well, I think the Hills-Bush way is definitely the better one because I think what you're really interested in is open markets. I'm glad to see that while the President went there charging unfair trade, he had already shifted to the concept of open markets. The real issue is whether the market is open or not. And I think we tend to exaggerate the degree of closeness of the market. I think what we really mean is not trade barriers, which in fact in Japan's case are less than ours. I mean, if you look at the U.S. policy, we have export restraints on virtually almost everything that Japan exports. And the large numbers of Japanese exports are subject to restraints. If you look at it in terms of the actual barriers which the two nations have enacted on each other's exports, Japan does pretty well on manufacturers and badly on agriculture, of course. So it is in a sense more open. I think what Amb. Hills and I think others are worried about is whether, in fact, there are any specific types of institutional features of the Japanese market whose unwitting impact basically is to reduce our market excess, or the ease of our market excess. I mean, to put it in a very stark way, I mean if they transact in Japanese and if we don't speak Japanese, it's as if that's a barrier, an informal barrier, and you might say that was unfair trade and a lot of people used to suggest things like that as unfair trade. In my judgment, there are a few things of that sort, but if economists who've been looking at these kinds of issues and trying to determine whether, in fact, Japan's imports are too low in a more objective sort of fashion, these studies are extremely divided and it's a very murky area. And there are large numbers of studies which suggest that we tend to exaggerate this approach.

MR. LEHRER: Then what's going on here, people using Japan, we've got hard times here so we're picking on Japan, looking for a villain?

MR. BHAGWATI: I think so. I think there are a number of fallacies which seem to be spread. One is, as I think Roger Mudd's own report pointed out, people tend to associate the balance of payments deficit, the balance of trade deficit, which we have, with the balance of trade surplus of Japan. There is no necessary connection. Our deficit simply reflects, as I think the administration well understands, our own excess spending. And there's nothing that the Japanese can do about that. Two, I think even this emphasis on the auto parts and so on and on the car trade, the mere fact that that balance of trade deficit happens to be roughly equal to or almost equal to the auto parts and the car deficit, that's obviously bad economics. I mean, there's no reason why one should single out one particular item which just happens to be equal to the deficit.

MR. LEHRER: All right.

MR. BHAGWATI: I would point out that that is the source of it and, therefore, we should do something about car exports.

MR. LEHRER: Mr. Prestowitz, yesterday you held a news conference and you said if something is not done, to help the American auto industry that it's for all practical purposes through, is that right?

MR. PRESTOWITZ: That's right. The U.S. auto industry operates at a tremendous structural disadvantage to the Japanese industry, and the disadvantage arises both from policies of our own government, which raise the cost of capital which put the full cost of caring, health care and pensions, on the companies, whereas, in Japan, those costs tend to be borne more by the government. And the second thing that disadvantages our auto companies in particular is the fact that Japan is the second largest market in the world for autos and the largest market in the world for auto parts. And yet, our companies find it virtually impossible to gain large significant shares of the Japanese market. When you consider --

MR. LEHRER: But is it your position that if the market was completely -- let's say not completely open, as open as our market -- if the Japanese car market was as open as the U.S. car market is, that more American cars would be sold in Japan?

MR. PRESTOWITZ: I think there's no question about that. Remember --

MR. LEHRER: What do you base that on?

MR. PRESTOWITZ: Well, recently I spoke with a 30 year veteran of Toyota who was the gentleman that led the charge of Toyota into the United States. And he told me that today the American cars have better fuel economy car for car than Japanese cars, essentially the same quality, reliability. He told me they're more comfortable. And he feels that there is a tremendous perception gap between the reality of the U.S. cars and the perception that the U.S. cars are somehow lagging.

MR. LEHRER: He felt that perception exists here in the United States, does it not?

MR. PRESTOWITZ: It does exist in the U.S.

MR. LEHRER: Why would it -- I mean, in other words, if we can't sell American cars in the United States, what makes us think we can sell it in Japan, where they'd have a built-in loyalty to their own cars already there? That's what I'm trying to get at.

MR. PRESTOWITZ: Well, remember, we do sell a lot of cars in the United States.

MR. LEHRER: Right, sure.

MR. PRESTOWITZ: As Congressman Gephardt pointed out, 2/3 of the market is American cars. But I think keep in mind that there are many categories of car, mini-vans, jeeps, categories of cars in the U.S. that are not even existing in Japan. I spoke recently with Mr. Utsumi, the former vice minister of finance in Japan. He drives a jeep Cherokee. He told me he wanted to buy a new jeep Cherokee, but in Japan it costs $40,000. That car costs $20,000 in the United States. If the car sold for $20,000 in Japan, Mr. Utsumi and his colleagues could buy more of them.

MR. LEHRER: All right. Let's say that by some whatever the President is able to remove these barriers. What would that do to the U.S. economy and to the U.S. car industry?

MR. PRESTOWITZ: Well, calculations have been made. Keep in mind this is a very theoretical question, because when you say remove barriers, what you're really saying is that by some magic stroke of the wand, the Japanese market would begin to look just like the American market. Now, if that were to happen, it won't, it's not going to happen, but if it were to happen, calculations have been made by economists at the Brookings Institution that Japan would increase its imports by as much as $80 billion, and that the U.S. share of that would beabout 30 percent. So say $25 billion of increase of U.S. exports to Japan. And if five or ten billion dollars of that were always in auto parts, that would make a big dent in the auto problem.

MR. LEHRER: Mr. Bhagwati, does that make sense to you, sir?

MR. BHAGWATI: No. I think if a Brookings economist made that calculation, I mean, since it's called a think tank, I think it will cease being a think tank simply because it will be a gross fallacy. I mean, I think nothing will happen to the balance of payments. There might be a temporary impact, but I think let me get back to the point which Clyde was talking about, which is that we would really be able to sell much more if somehow something changes the Japanese end. But I simply see no reason why it should because I think there's absolutely no evidence that we're able to hack it vis-a-vis the Japanese and in third markets either, and even on our own home turf we were having difficulty on quality problems. Too, I think the Japanese mark is open. BMW has got an in with its own distributor network. It's true that they have a different way of doing distribution, each particular producer having his own distributive outlet. Well, that's the way they do it and we could take it for granted and now we say all right, we want it done the way we do it over here. Fine, so they're beginning to accept that, but can you imagine many of our cars being put next to Nissan? In fact, we probably make it worse to sell them rather than easier. I mean, I don't want to appear so terribly cynical about it, but certainly, as you were pointing out, it's the consumers who count and the consumers seem to have a very definite preference, have good reasons for Japanese cars.

MR. LEHRER: How do you answer that, Congressman Gephardt?

REP. GEPHARDT: Well, I think the professor's facts are just wrong. We're doing fine in Europe. We're going to have a $20 billion trade surplus in Europe this year. As I understand it, their consumers are just as picky and choosy as the consumers in Japan. If our products are so rotten and lousy, why do we have such a surplus in Europe? Second, a lot of our American manufacturers for some time have been located in Europe, building cars in Europe, and, in fact, they do very well in the European market. But the fact is they cannot get into the Japanese market. They've never been able to get into the distribution network, and they've never seen it as possible and neither have the Europeans to be able to go to Japan, build plants, and build cars for the Japanese market. There is something different and unique and special about Japan. I'm not saying it's nefarious. I'm not saying they're trying to be difficult or even unfair. It's just the way it is, but it doesn't, it's not compatible with the rest of the world's market, and that's what we have to try to achieve, greater compatibility.

MR. LEHRER: Amb. Hills, to that question, some people have suggested that what the United States is essentially doing to Japan is saying, don't be Japanese, be Americans. Why should the Japanese be Americans?

AMB. HILLS: We're asking them to open their markets so that their consumers have the broadest range of choices and our businesses have the opportunity to export. They simply can't free ride on the multilateral trading system that gave them their wealth and not open up their markets and let the rest of the world sell to their comparative advantage. That's what we're asking Japan to do, not to buy a shoddy product, not to buy a product that won't compete, but to open up its market to its consumersand to let the competition rule, purchases on the basis of price and quality.

MR. LEHRER: Mr. Prestowitz, Lee Iacocca, head of Chrysler, said in Tokyo today that this was a terrific thing that the President had done, that is taking him and his twenty other fellow executives with him. It's the beginning of an industrial policy of the United States similar to what Japan and the other countries of the world, particularly in Europe, have been doing for years, partnership, he said, between business and government, is he right?

MR. PRESTOWITZ: Well, I don't know if it's the beginning of that kind of a partnership, but it certainly is something different and has been done before. And the President certainly is raising for the first time at the Presidential level in quite some time the central issue between the United States and Japan and Korea and other Asian countries.

MR. LEHRER: But what do you think about his taking the executives there and what signal that sends?

MR. PRESTOWITZ: Well, the signal it sends is that the United States is raising the priority that it gives to economic and trade issues. And I think that's a very positive thing.

MR. LEHRER: Mr. Bhagwati, what do you think about that?

MR. BHAGWATI: I think he took the wrong lot of people with him, but I think basically the notion that --

MR. LEHRER: What do you mean he took the wrong -- who should he have taken?

MR. BHAGWATI: Oh, I think he certainly should have dropped the car industry executives, because that is an industry where we have lost competitive advantage, we have given them 10 years of export restraints that they haven't made up for in that time. Really, I mean, I don't think they need any kind of help, and whatever help we extend to them is not going to help them very much.

MR. LEHRER: Do you happen to agree with Richard Cohen of the Washington Post who wrote this morning it was also unseemly to take these corporate executives who are making millions and millions of dollars a year personally, while they're laying off thousands of employees?

MR. BHAGWATI: Well, I think it's bad for those guys, I think rather than for the President. I mean, I certainly would focus our attention again on the fact of the use of the export restraint period, to come back and do business, but essentially to hand out large bonuses to themselves rather than really shape up, and I think they really don't deserve any kind of help. I think it's not an industry which can be managed by us particularly, but I'm not worried about the United States because we have a whole lot of Japanese transplants which are in the United States. And like Robert Reisch says, I mean, you know, the fact that they're here is really important. So we have the industry and I think we're attaching too much importance to the big three.

MR. LEHRER: Congressman Gephardt, what do you think of the simple, of the President taking these executives with him?

REP. GEPHARDT: I think it was the right thing to do. I think it is the first step toward what we do need, which is a much greater cooperation in industrial policy, if you will, between the government and the private sector. I don't want to carry a breve for anybody's bonus or anybody's compensation. Probably they're overpaid and that needs to be addressed. There's a lot of improvement that needs to take place. But I get a little fed up with this blame America first attitude, always finding the problems on our side and never being willing to address the deficiencies on the other side. And as I said a moment ago, if you pick up the recent consumer literature, you'll find that in almost every category of car American cars are now the best buy. The competition is working. Our productivity and our quality is improving, and I think American consumers, as well as Japanese consumers, should give American cars another look.

MR. LEHRER: All right, Amb. Hills, gentlemen, thank you very much.

MR. MacNeil: Still ahead on the NewsHour, Paul Solman on U.S.- Japanese relations and more on the Soviets and American MIAs. SERIES - CULTURE CLASH

MR. MacNeil: Pursuing Japanese-U.S. matters, we turn next to Part 2 of our series entitled Culture Clash. Last night Business Correspondent Paul Solman with public station WGBH looked at the way Americans view the Japanese. Tonight he turns the table and examines the relationship from the Japanese viewpoint. [JAPANESE TV COMMERCIAL]

MR. SOLMAN: A Japanese TV ad mocking militaristic Japanese managers and their American workers, many of whom just can't keep up. [JAPANESE TV COMMERCIAL]

MR. SOLMAN: The stereotype of the lazy American is becoming commonplace among the hard driving Japanese. More and more Americans are simply down and out. The negative image of Americans is increasingly popular in Japan. But Japanese still obsess about America. For the three years leading up to the 50th Pearl Harbor anniversary, the Japanese worried about how Americans would react. They may poke fun at us at times, but more than 3 million Japanese will have traveled half way around the world this year to see how we live and to shop in America. Increasingly, Japanese may feel superior to Americans, yet, they're as drawn as ever to American culture. In a word, they seem ambivalent and this ambivalence towards us mirrors our ambivalence towards them. Where does their attitude come from? In large part, it would appear, from the often extreme differences between our two cultures, differences which, absent deep understanding, have often led to caricature. Nashville, Tennessee's Grand Old Opry, a typical stop for Japanese tourists in America, only these Japanese are not simply tourists. They're corporate executives here to size up the state of American society and report their impressions back home. During a break between acts, Tatsuo Itoh on the right and Jiro Aiko are given a backstage tour. Immediately they're confronted by conspicuous contrast with culture back home. For example, public displays of affection are very rare in Japan, so is back stage informality.

JAPANESE TOURIST: I thought this place must be closed for general public. It seems this is open. Everybody can come in.

SPOKESMAN: Is this gentleman from Sony?

SPOKESMAN; Yes, he is.

SPOKESMAN: I want to thank you. You bought CBS and three publications. I make the awards for CBS.

MR. SOLMAN: CBS Records is a major label in the country music business, which makes Jiro Aiko a sort of Nashville mogul.

SPOKESMAN: Four of your artists, if you don't keep up with it - - four of them have gone gold, Charlie Daniels, Vern Gazdon, Ricky Van Shelton and --

MR. SOLMAN: Aiko is a former government official, now a top executive at Sony. Back home, he'd probably never find himself this cozy with a total stranger, but here his Japanese politeness has him trapped. Aiko may be a little embarrassed by this encounter, but he's not surprised. Having spent years in the states, he understands the cultural divide.

JIRO AIKO, Sony Corporation: I think always that the American society is verbally explicit society.

MR. SOLMAN: Explicit?

JIRO AIKO: Yes, explicit society verbally, but Japanese society is very implicit. One of the main characteristics of the Japanese culture are literature, anything. The role of vacuum is very important.

MR. SOLMAN: Role of the vacuum, space, silence?

JIRO AIKO: Yes, yes.

MR. SOLMAN: Well, there's nothing implicit about the Grand Old Opry, and in other ways too, American society seems to declare itself all too publicly to the Japanese.

TATSUO ITOH, Fuji Xerox Corporation: When I arrived at Kennedy Airport, first, I was a little bit shocked at the shabby status of airport, and again while we were on the way to the hotel, I saw again the roads were terrible and there are so many rubbish thrown away on the floor, and I thought the American economy or American culture, itself, might be at least on the verge of decaying in certain areas.

MR. SOLMAN: In the eyes of many Japanese, it's not just our infrastructure that's crumbling. Prof. Yoshi Tsurumi came here from Japan in the '60s and now teaches at the City University of New York. He says that despite our military successes, the Japanese worry about an America in economic decline.

YOSHI TSURUMI, City University of New York: Problems are here visible. It doesn't have to be Japanese to recognize them, but the lack of will on the part of American leadership, in political leaders to really deal with them -- even recognize them as problems -- that scares many Japanese, and the younger generation simply picks up on that theme and say American support is now crumbling, American days are over.

MR. SOLMAN: Then years ago when U.S. auto workers trashed this Toyota, Japanese TV ran the footage again and again -- to the Japanese, a sign that the U.S. was scapegoating them for America's decline. The image lives on. In a recent Japanese economics primer called Japan Inc. the U.S. auto industry is represented by thinly disguised Chrysky Motors, management by Chrysky's CEO, Lee Ironcoat. Both are treated with contempt. Harvard Business School Professor Mike Yoshino is a native Japanese in whom his countrymen confide. He hears the scorn firsthand.

MIKE YOSHINO, Harvard Business School: It's not the words, the expressions they use, but it's a disdain, almost a despise, a contempt. Americans don't work hard. All Americans really have serious drug problems and Americans are poorly educated. Americans are not disciplined.

MR. SOLMAN: Business Consultant Sheridan Tatsuno is a third generation American with extensive Japanese contacts.

SHERIDAN TATSUNO, Business Consultant: The Japanese are so puzzled and in somewhat they feel sorry for us. They keep asking what's the matter with America, why can't you get your act together?

MR. SOLMAN: According to James Fallows, a prominent analyst of modern day Japan, these new negative feelings are tinged with an old fear.

JAMES FALLOWS, Writer: I think we can understand it in the way as children might look on the schoolyard building, as somebody who internally was worse than us but also was bigger than us, and we were vulnerable to him in a certain way. He could wallop us in the side of the head at any given time. I think there's something of that combination of attitudes. The Japanese feel with some reason they just outperformed and out tried and out worked and out sacrificed the U.S. At the same time, the U.S. is big and they've gotten in trouble by challenging the U.S. before, so I think there is that ambiguity, as you would have towards the big bully.

MR. SOLMAN: Whatever mixed feelings the Japanese may have about the U.S., for now at least they keep coming to sell products here, to buy businesses, to invest, as in this Nissan automobile plant in Smerna, Tennessee. In 1981, this factory opened under protest as local Teamsters opposed the use of non-union labor.

SPOKESMAN: Officials tried to carry on, but they were constantly met with chants of "go home, Jap," "Remember Pearl Harbor", and "Go Home Rat!"

MR. SOLMAN: Representing his government, there's Jiro Aiko right in the thick of it.

MR. SOLMAN: How did it make you feel?

JIRO AIKO: Well, I felt -- typical part of society.

MR. SOLMAN: What do you mean?

JIRO AIKO: Very competitive.

MR. SOLMAN: And very angry. Were you scared at all?

JIRO AIKO: No. I enjoyed it.

MR. SOLMAN: You enjoyed it.

MR. SOLMAN: Aiko enjoyed the energy, the freedom, the Americanness of what he saw, because it harkened back to a vision of America that many Japanese still admire. [Commercial] This Japanese Jack Daniels ad is trading on the positive stereotype of Tennessee, home to traditional American values like individuality and openness. Thus, Japan's double image, America land of the free, America land of the homeless. This split view of Americans in particular and outsiders in general has a long history in the land of the rising sun. As the Japanese have compared themselves to the rest of the world, a sense of supremacy have alternated with what at times has seemed like a national inferiority complex because historically, the Japanese, like other relatively isolated peoples, have seen themselves as a race apart. In the mid 1800s, when Commodore Perry's gunboats pried open Japan, the double image was striking; to some, the agent of a more advanced culture, to others, a big-nosed barbarian. For the next half century, the positive and negative images co-existed. Japan studied and imitated the West, acting as if Western ways were superior to their own, but says one expert:

CAROL GLUCK, Columbia University: At the same time the Japanese are playing jazz and dancing in the cabarets, they were also reacting to the Immigration Act that excluded Japanese from the United States, so that the image was good American, bad American, side by side, in the minds of the Japanese. But those images did not cause Pearl Harbor. It was real history that caused Pearl Harbor.

MR. SOLMAN: Japan scholar and historian Carol Gluck makes a somewhat subtle point here, that it wasn't just our images of each other that to war in the Pacific, but actual historical events.

CAROL GLUCK: The depression, Nazi aggression, Japanese aggression in China, but once Pearl Harbor occurred and the two countries were at war, those negative images and stereotypes were ready for each country to use against one another.

MR. SOLMAN: As Prof. John Dower has shown in the book "War Without Mercy", Westerners were now foreign devils. Winston Churchill had horns. The man behind the mask, FDR, was a demon. As the war was ending and Japan braced for invasion, Yoshi Tsurumi's teacher talked to the kids about what to do when the American cannibals came ashore.

YOSHI TSURUMI, City University of New York: Not only we talked about it, we practiced, hoping that we wouldn't have to do that, but the choice was either you were eaten alive by the Americans or commit suicide -- suicide and die honorably.

MR. SOLMAN: You practiced it?

YOSHI TSURUMI: Of course, we practiced it.

MR. SOLMAN: How did you practice it?

YOSHI TSURUMI: We didn't have weapons or anything. We were just taught a couple of things. Hanging yourself is the easiest thing or jumping off the cliffs, you know, kind of low tech kind of suicidal methods which were readily available to any human being.

MR. SOLMAN: When the Japanese finally met Americans in the flesh, however, they found themselves looking up to the friendly and generous outsiders.

TATSUO ITOH, Fuji Xerox Corporation: And they are so tall and they look so rich and we know that we were defeated by United States, so we look at them with a kind of awe.

YOSHI TSURUMI: Any Japanese elders of my age, that means mid 50s and above, do remember the tremendous changeover that took place in each individual's mind from just the Americans as ogre to Americans as benign and very understanding, just the leader, and that feeling and that impression's very very strongly surviving even today, however, the younger generation, younger than say 40, who grew up after World War II, don't remember those what happened during World War II. It wasn't taught, et cetera, and suddenly just as they grew into the prosperity of Japanese post war economy, then they begin to develop certain negative perception about United States. Now more importantly, those younger generations are now coming into the position of leadership in industry, academe, and government. A tremendous generational changeover is taking place in Japan.

MR. SOLMAN: And the new leadership doesn't remember Pearl Harbor or American generosity. Meanwhile, the older generation is trying to buy our good will or simply become good corporate American citizens. We're back on tour with our Japanese executives. Last stop is New York's Japan Society, where they're listening to appeals for funding.

GLEGG WATSON, Xerox Corporation: In many respects, blacks in America have tremendous pride in your success even though they're Americans, 30 million black people might become much more productive once you realize that we're not stupid.

MR. SOLMAN: In a poll last year, nearly half the Japanese people rank minorities as America's No. 1 economic problem. And some observers think Japanese racial prejudice is so deep seated it extends beyond African-Americans.

JAMES FALLOWS, Writer: I think the only way a white American can have a sense of what it's like to be a black is to live in Japan for a while, because it's the only place on earth I think where your racial identity is so important in a thousand summary judgments each day and is on the whole negative that -- I've lived in Africa and they are obviously different from everybody else, but it was somehow on a different plane in Japan, where I could never ever escape the way I looked.

MR. SOLMAN: Just picture blond, six foot Jim Fallows in this typical Tokyo crowd. It's no surprise that such a homogeneous society treats the rest of us as outsiders, but in the United States, a nation of immigrants, we have to make a serious effort to get along with neighbors very different from ourselves. So finally as a sort of experiment, I put perhaps the ultimate American question to a very worldly wise Japanese.

MR. SOLMAN: I want you to react to me as a person. I want you to try harder to like me. Would you try harder, or is it an unfair demand?

JIRO AIKO, Sony Corporation: Well, this is not my personal answer, but I'm going to tell you what the, you know, normal reaction of Japanese to your question -- I know that I cannot comply with your request, but still I want to be very polite to you and I don't want to disappoint you.

MR. SOLMAN: So you're saying that Americans want something from the relationship that the Japanese just can't give?

JIRO AIKO: If we remain as we are.

MR. SOLMAN: If they remain as they are. Well, in a sense, they can't in a multinational, multilateral world, but change in the Japanese character has tended to be a rather slow and uncertain thing. As long as Japanese see themselves as deeply different, they'll probably see Americans as somewhat curious creatures for whom stereotypes are the easiest categories to apply, and if U.S. society remains as it has been in recent years, then the Japanese stereotype of us is likely to become even worse than it already is. UPDATE - KGB

MR. LEHRER: Finally tonight an update on the MIA story, the one about the more than 2,000 Americans still listed as missing in action, and the Vietnam War. Yesterday a special Senate Committee said it would conduct investigations in Indochina next month. The latest twist comes from interviews with a former top ranking Soviet KGB official, Oleg Kalugin. He said the KGB interviewed American POWs in Vietnam after the war ended and after all Americans were supposed to have been returned home. Kalugin said the interrogations were conducted by another KGB officer, Oleg Natchaperenka. Correspondent Charles Krause talked to Kalugin in Moscow.

MR. KRAUSE: Gen. Kalugin, thank you for joining us. You've made some statements that during your years with the KGB some of your men went to Vietnam to interview American prisoners of war. What year were your men in Vietnam?

GEN. KALUGIN: I would not recall exactly the date, but I mentioned '78 as a possible date because on that year we concluded a treaty of cooperation between the Soviet Security Police and Intelligence and the Vietnamese interior ministry, and it was before that date, in that particular year, that Natchaperenka had interviewed some Americans, and I know at least three names -- not names, I do not mention the names, I do not really know the names, but at least three persons who he had contact with and who he interviewed for the purpose of gathering intelligence information.

MR. KRAUSE: What kind of information would your, would the KGB have been particularly interested in at that time?

GEN. KALUGIN: Well, primarily political and counterintelligence, well, generally and first of all connected with the CIA operations, or military operations or military intelligence operations in Vietnam or elsewhere. So I think the major source of some information was the man from the CIA who gave us, he gave us some, some data about U.S. operations, but how valuable the information was I do not know. There was nothing very important but useful, as we say, because by piecing together various information sources we could get a picture of what was going on. And that was the, that was several years after the war was over.

MR. KRAUSE: You're saying that one of the three Americans whom your men interviewed was, in fact, a CIA agent who had been captured.

GEN. KALUGIN: Right, yes. The other two, as far as I remember, was an air force pilot and a navy officer. Well, I understand also that Natchaperenka was given a choice, but not a wide range, but some people who he could choose from who to interview, the most interesting case was, of course, the CIA person.

MR. KRAUSE: Would you have any idea what happened to those men?

GEN. KALUGIN: At least two of those who we interviewed, they went back home, and I do know it for sure because we checked with the Vietnamese about the date of their departure because we wanted them to settle down in the United States and then probably try to approach them. But unfortunately the whole scheme failed because the phone numbers given were either false or did not operate, so the whole thing was over by that time. But they did go home.

MR. KRAUSE: There have been reports that Soviet authorities transported some of these men from Vietnam to the Soviet Union to interrogate them here. Do you know anything about that?

GEN. KALUGIN: Well, this, what this story has started from, as far as I am concerned, I first mentioned the episode with the American prisoners of war in Vietnam in my manuscript which was written about eight months ago. Then I mentioned it in my interviews with the American newspapers last summer and it was simply an episode in our cold war operations against the United States. And I said at that time, and I say it now, that no American prisoners of war were taken to the Soviet Union through the KGB channels. I do not see any reason why they should be taken to the Soviet Union through other channels, though I simply do not know. But as far as the KGB is concerned, we had not a single American ever taken to Russia from Vietnam and we had no reason to do so. We could just as well have them questioned in Hanoi as we did.

MR. KRAUSE: On the other hand, Soviet military authorities had a real reason for wanting to interrogate these men because apparently they had evaded Vietnamese air defenses which were, in effect, Soviet air defenses. Is there any possibility that the Soviet military might have brought these men here for questioning?

GEN. KALUGIN: Well, I really do not know that, but theoretically, of course, I understand the military was very interested in American knowledge of military know-how. But I do not see why should they be taken to the Soviet Union. They could have been interviewed in Vietnam just as well as they were by the KGB people. So theoretically, I do not exclude the possibility, but, as a matter of fact, and as a former high officer of the KGB, I do not see reasons why they should be taken to the USSR. Normally, this would require a special political decision. Do not forget the Soviets never operated without the guidance of the Central Committee of the Communist Party, so if this had been the case, there should have been a decision taken on the top political level. Whether it has been taken, I do not know.

MR. KRAUSE: There are also reports that some of the MIAs were resettled in the Soviet Union, the old Soviet Union. Is that possible?

GEN. KALUGIN: Well, I would not exclude that some individual Americans would settle elsewhere besides the United States after the war. They could have stayed in Vietnam, say marrying Vietnamese girl, and just breaking all former ties with his country, I mean, his motherland. And while I do not know why should they go to the USSR, this is not the best place to live, by the way, for any American, but if that was the case, and I would not exclude any individual case or cases, that would be of their own choice, not by force or intimidation or anything else of that kind.

MR. KRAUSE: But you don't exclude the possibility?

GEN. KALUGIN: This is something which should be dealt through official channels in the USSR. If I were in the shoes of some American congressmen or the State Department people, I would simply officially request the Soviet government to investigate or find out if there were such cases in the past. Who knows? Maybe there were really such cases, but they were just considered as private and having no political implications. As a matter of fact, they really could have been treated that way.

MR. KRAUSE: Again, you think it might be a good idea if some members of Congress or others were to request officially?

GEN. KALUGIN: Oh, yes, I think this would be the best thing to do. I mean, the best thing to do is to go through official channels. Today we really are open and I do not see reasons why anyone would try to conceal what was done or happened years ago. There is absolutely no reason to do so.

MR. KRAUSE: Thank you very much. RECAP

MR. MacNeil: Again, the main stories of this Tuesday, President Bush pressed Japan for trade concessions, saying both countries stood to benefit from free and open trade. In Yugoslavia, a federal army warplane shot down a European Community helicopter, killing five truce observers. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with part three of the Solman series on Japan, a look at what happens when the American and Japanese cultures collide in the workplace. I'm Jim Lehrer. Thank you and good night.