Japanese say auto dispute is resolved Hard-fought deal includes increase in imports from U.S.

January 09, 1992|By John E. Woodruff | John E. Woodruff,Tokyo Bureau of The Sun

TOKYO -- Japanese trade negotiators said today that they and their American counterparts had reached a hard-fought agreement on automobile trade, ending three days of confrontation over Japan's $41 billion trade surplus with the United States.

Yuji Tanahashi, a vice minister of international trade and industry, told Japanese reporters of the agreement after successfully seeking the approval of Prime Minister Kiichi Miyazawa at the prime minister's residence.

The U.S. delegation negotiating as part of President Bush's official party here declined to confirm or deny the report, but informed U.S. diplomats acknowledged that the negotiations had ended with what one of them called "some degree of success."

No details were made public.

Mr. Miyazawa, speaking to reporters as he and Mr. Bush entered their illness-delayed second day of summit talks, promised that the entire plan would become public at a late-afternoon news conference he and the president have scheduled.

"Japan has made the greatest possible concessions, and the numbers will not change," Mr. Tanahashi said.

Some reports said that the basic numbers the Japanese had been offering for three days had finally been accepted by the U.S. side.

The proposals by the Japanese would do little to change the $41 billion annual U.S. deficit in the two countries' trade, three-fourths of which is in automobiles and auto parts.

The core of the known Japanese offers has had three key points:

* Japanese automakers would use their sales networks to seek buyers for an additional 19,700 U.S.-made vehicles a year by 1994, over and above the approximately 35,000 now sold in Japan.

* Japanese automakers would strive to double their imports of U.S. auto parts and increase their use of U.S.-made parts in Japanese auto plants.

* Big Japanese industries would strive to add $10 billion to their imports of U.S.-made parts, components and equipment, as part of a Ministry of International Trade and Industry package that also would entail extensive government-financed help for foreign firms seeking to set up or expand here.

Throughout the negotiations, the U.S. side had sought dramatic increases in the numbers, particularly in auto parts, and had demanded that they be expressed in some form that could be used as a measuring stick for future "results."

The proposed increase in U.S. auto sales and the doubling of U.S. autoparts imports were being ridiculed as too little by the U.S. negotiators as late as last night.

The Japanese resisted demands for "results-oriented" negotiations, insisting that setting goals would violate free-trade principles under which governments should not intervene in the marketplace.

U.S. officials countered that the pattern of interlocking relationships among Japanese companies discourages genuine free trade and that the only way to change the system is to stress results.

"They're talking at each other, not with each other -- in some very basic ways, neither side is really hearing what the other is saying," a Japanese official had said yesterday.

From Mr. Bush's arrival on Tuesday, the automobile trade was the central point of contention.

Japanese auto manufacturers announced plans, devised under intense pressure from the Tokyo government eager to mollify the Americans, to import a few thousand U.S.-made cars each and sell them through their dealer networks.

U.S. officials have derided that as a drop in the bucket compared with the 1.5 million autos Japan exports annually to the United States. The American position has been that radically increased use of U.S.-made auto parts -- both in Japan and in Japanese-owned factories in the United States -- is the best way to reduce the trade imbalance.

Yesterday's talks made it clear that the U.S. side was rejecting Japan's time-honored device of sending negotiators home laden with "omiyage" -- souvenirs -- designed to promote good feeling without fundamentally changing this country's way of conducting trade.

"Japan is not yet an open trading system," Mr. Bush bluntly told Mr. Miyazawa at their first meeting yesterday, National Security Adviser Brent Scowcroft told reporters at a briefing yesterday afternoon.

Japanese trade negotiators appeared stunned by U.S. rejection of the gestures made so far.

Japan "can't go any farther," Kozo Watanabe, the minister of international trade and industry, said yesterday.

Signs of trouble came in midafternoon yesterday, when the Ministry of International Trade and Industry canceled a 5:30 p.m. briefing at which it had planned to lay out the "action plan" that was to be the core of its response to the U.S. pressure.

Noboru Hatakeyama, the vice minister who had been scheduled to conduct the briefing, complained bitterly that the Americans "don't seem to be able to understand" that what they were asking amounts not to free trade but to "managed trade" designed to assure U.S. exporters a share of certain markets in Japan.

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