Japan agrees to open glass, other markets

October 02, 1994|By New York Times News Service

WASHINGTON -- In a significant advance for the United States, Japanese and U.S. negotiators reached agreements yesterday to open Japan's markets in insurance, glass and medical and telecommunications equipment in ways that should increase U.S. exports to the world's second-largest economy.

But the all-night negotiations to meet a U.S. deadline failed to produce a deal to increase Japanese purchases of U.S. cars and car parts, which account for two-thirds of Japan's $60 billion trade surplus with the United States.

President Clinton responded by immediately carrying out his threat to initiate limited trade sanctions against Japan for failing to open more of its market for auto parts, even as he expressed satisfaction with those deals that were struck.

The sanctions process, though, requires a 12- to 18-month period of investigations and further consultations before punitive tariffs are imposed on Japanese exports to the United States. As a result, the proposed sanctions are not expected to disrupt relations between the two countries or to rattle the financial markets.

Indeed, the value of the dollar, which has slid steadily against the yen since the beginning of 1993, is expected to strengthen as a result of the package agreed upon yesterday, which should reduce a lot of the trade tension between Washington and Tokyo.

Opening four lucrative sectors of the relatively closed Japanese marketplace, the deal concludes 15 months of often bitter negotiations between Washington and Tokyo. If the agreements work out as written, they may constitute one of the most important breakthroughs in U.S.-Japanese trade relations since World War II.

The deal with Japan should also make it easier for Mr. Clinton to win congressional approval for the global trade agreement, the General Agreement on Tariffs and Trade, which is before Congress and which would lower tariff barriers around the world.

Many trade analysts and industry representatives said that theythought the package was a good bargain for the United States in general and for U.S. companies in particular. That is, assuming the Japanese carry through with the promises to help foster progress "in access and sales" in the areas of insurance, glass and government purchases of medical and telecommunications equipment.

The Clinton administration can finally point to some tangible results from its get-tough strategy with Japan.

"This is certainly a plus for U.S. trade policy," said Clyde V. Prestowitz Jr., president of the Economic Strategy Institute, a research group financed in part by U.S. corporations and car companies, which have long advocated a hard-nosed trade policy with Japan.

"The deal establishes two things: One is a recognition on all sides that the Japanese market has certain structural barriers that need special attention. Second, there is an implicit commitment by Japan to deal with those barriers in ways that can be measured."

Mr. Prestowitz, a former U.S. trade negotiator, added: "It is unfortunate that they did not get anything on autos, but at least Clinton did not back down, which is what so often happened in the past."

The failure, though, to reach an agreement on autos is a big hole in the package. It is true that U.S. officials are increasingly less concerned with the sales of U.S. autos and original auto parts to Japan, because those have been rising in recent years, thanks to greater efforts by U.S. manufacturers to sell to the Japanese -- although the sales numbers remain very low.

But U.S. car makers are still largely frozen out of the Japanese market for replacement auto parts.

The actions toward sanctions that Mr. Clinton announced yesterday will be directed at opening that tightly controlled sector.

The fact that the president carried through with his vow to begin immediately the process of imposing trade sanctions on Japan for its failure to move on replacement car parts puts pressure on Tokyo to make concessions in future talks planned on this issue.

Still, the value of the entire package can only be assessed after several years. Sen. Max Baucus, a Montana Democrat and chairman of the Senate subcommittee on international trade, said that he was "disappointed that Japan failed to eliminate its pernicious trade barriers in the auto and auto parts sectors."

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