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Japan Heads Off Sanctions, Drops Ban on U.S. Phones : Pact Opens Market to Americans

June 28, 1989|From Times Wire Services

WASHINGTON — Japan averted threatened punitive tariffs today by signing an agreement that makes it easier for U.S. companies to compete in the lucrative mobile telephone market.

U.S. Trade Representative Carla Anderson Hills said the measures "should provide immediate improvements for U.S. companies" seeking to break into the Japanese telecommunications market.

The accord was reached at 4:30 a.m. after two all-night bargaining sessions. The United States had threatened tariffs of up to 100% on some Japanese products if agreement had not been reached by July 10.

The list of potential targets for higher tariffs had included color television sets, tape recorders and photocopying machines. That broad variety of goods, including some of the most popular Japanese electronic devices sold in this country, emphasized how seriously the Administration was taking this issue.

Embryonic Stage

Industry analysts estimate that the Japanese mobile telephone market, still at an embryonic stage, should grow to 4 million units by the year 2000 from 200,000 now.

Hills said that even though the agreement covered only cellular telephone and related "third-party" radio, which allows mobile phones to be used from rural areas, "we hope that the results will be a precedent for the entire telecommunications market in Japan."

"I hope that entrepreneurs will be active and consumers in Japan will very much benefit from it," she said.

The negotiations had been prompted by a complaint from the world's largest mobile phone maker, Motorola Inc. of Schaumburg, Ill., which has been seeking to introduce its small hand-held cellular phones into the Japanese market.

A key sticking point in the negotiations was that Motorola wanted to sell its ultralight, 10.7- ounce micro hand-held telephone without an adapter to meet the Japanese system.

Marketing Edge

Japanese officials had argued they were not blocking the U.S. product because it could be sold with modifications.

But Motorola did not want to modify its product because its marketing edge of lightness would be damaged.

Hills said the Japanese agreed to changes in licensing procedures for third-party radio companies, improved access to broadcast spectrum needed for third-party radio and cellular phones sold by foreign companies and "adoption of other rules which will treat foreign third-party radio companies on a more equitable basis."

Agreement was reached after marathon negotiations between Japan's special negotiator, Ichiro Ozawa, and Deputy U.S. Trade Representative S. Linn Williams.

The talks had been broken off early Tuesday but were resumed later in the day at the request of Hills.

The United States last month cited Japan, Brazil and India as countries indulging in unfair trading practices, straining relations with those countries. Under the so-called "Super 301" section of the 1988 U.S. Trade Act, countries cited as trading unfairly had 18 months to mend their ways or face retaliation.

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