Japan criticized on telecommunications

July 07, 1995|By Journal of Commerce

WASHINGTON -- Japan is not carrying out its commitment last fall to buy more foreign -- mainly U.S. -- telecommunications equipment, U.S. electronics industry executives complained yesterday.

"We are not seeing the progress we had anticipated," said William Archey, president of the American Electronics Association. "We are not coming close to fulfilling the goal" of increased sales implicit in two U.S.-Japanese agreements negotiated last year.

One agreement commits the Japanese government to "significantly" greater purchases of foreign telecommunications equipment and services. In a second agreement, Nippon Telephone & Telegraph Corp., which is two-thirds government-owned, made a similar commitment.

Despite the agreements, said Arnold Brenner, a Motorola Inc. executive vice president, U.S. company data suggest that this year U.S. telecommunications equipment suppliers will have a smaller -- not larger -- share of the combined Japanese government-NTT market.

The foreign share of that market may fall to 3.3 percent, the lowest since 1992, the American Electronics Association estimates. U.S. sales, which represent about 80 percent of those foreign sales, last year totaled about $450 million.

The two Japanese pacts had raised U.S. industry hopes that by the year 2000 they and other foreign suppliers would have captured at least 15 percent of the government-NTT market.

The current decline in market share, Mr. Brenner suggested, reflects a number of anti-competitive practices in Japan, including extremely close Japanese buyer-supplier relationships and bidding specifications tailored to Japanese suppliers. A weak Japanese economy could be another factor, causing the Japanese government to become more "protective" of Japanese firms, he said.

U.S. trade officials, in a "midterm review" next week in Tokyo of the two telecommunications agreements, are expected to press the market share issue with Japanese government officials.

The U.S. industry, said Paul Wondrasch, an AT&T Corp. vice president, also expects that U.S. trade officials will raise another emerging problem with the telecommunications accords -- whether they cover newly developed technology, such as personal communications services.

An NTT subsidiary reportedly is arguing that those services not be covered. If they aren't covered, said Mr. Wondrasch, it would block U.S. suppliers from "potentially explosive" market opportunities.

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