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Settlement May Be Near in Japan Trade Dispute : Policy: Progress on cellular phone talks reported. Pact could head off U.S. sanctions.

March 10, 1994|DAVID HOLLEY | TIMES STAFF WRITER

TOKYO — Negotiators for two companies at the center of a bitter dispute over access to Japan's cellular telephone market are close to a settlement that could head off threatened U.S. sanctions.

The Clinton Administration has started a process that will allow it to impose several hundred million dollars' worth of sanctions on Japanese exports to the United States for what it views as Japan's failure to live up to the terms of a 1989 market-opening agreement.

The dispute, which involves Motorola Inc. and Japan's Nippon Idou Tsushin Corp. (IDO), is just one of several contentious trade issues over which Washington has raised the possibility of retaliatory action against Japan for maintaining obstacles to foreign imports.

"There is much progress, but we have not yet achieved an official settlement," Shinji Kimura, a spokesman for Nippon Motorola Ltd., said today. "We will still need a little bit more negotiation with IDO."

The two sides have roughly agreed on a plan under which IDO would build 159 additional relay stations by March, 1996, to expand services for Motorola-type phones in the populous 155-mile corridor from Tokyo to Nagoya, the Japan Broadcasting Corp. reported.

In Washington, U.S. Trade Representative Mickey Kantor said the United States is pleased with the positive trend in the talks, but he stopped short of easing the threat of sanctions. Washington will want Tokyo to ensure that any eventual final agreement is fully honored by IDO, he said. The Japanese government must ensure "that they are going to stand behind it and make sure that it is carried out," he said.

As portrayed by the Clinton Administration, the case typifies problems that foreign companies face in trying to enter the lucrative but highly regulated Japanese market. Motorola, backed by the U.S. government, has charged that Japan has maintained obstacles to its becoming competitive with its cellular phone service in the Tokyo-Nagoya corridor.

Motorola says it has about 49% of the market in the seaport city of Osaka, where it has not faced similar obstacles, but has only 12,900 subscribers in the Tokyo-Nagoya corridor. Japanese systems using different technology, marketed by IDO and Nippon Telegraph & Telephone Corp., have about 1.2 million customers.

Under pressure from the United States, Japan agreed in 1989 to assign some frequencies in the Tokyo-Nagoya corridor to the Motorola-style cellular phone system and to require IDO to construct the transmitters required for the system to work. In effect, IDO was required to provide the infrastructure for two competing systems--one using NTT technology and the other using Motorola's.

The U.S. complaint basically is that too much emphasis was put on the NTT system and not enough on Motorola's.

IDO has constructed 190 relay stations for the Motorola system, but more are needed for Motorola phones to provide full service in this area. The current dispute centers on how many more stations IDO will build, when they will be built and whether allocated frequencies will be expanded.

Motorola's Kimura said today's news reports reflect tentative agreements on the relay stations issues but that it is impossible to have a final agreement in any sector until an overall agreement is reached.

Negotiations are now focused on Motorola's request for a more even allocation of frequencies between the NTT and Motorola systems, Kimura said.

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