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Cellular Pact May Not Trigger Buy-U.S. Spree : Trade: Japanese are unlikely to rally around American products even if they are significantly cheaper.

March 14, 1994|LESLIE HELM | TIMES STAFF WRITER

TOKYO — The United States and Japan may have forged an agreement that will intensify competition in cellular communications along the crowded Tokyo-Nagoya corridor. But Americans shouldn't expect a big "thank you" from Japanese consumers.

In the latest trade dust-up between the two nations, it is Motorola and America that are the targets of Japanese wrath, not the companies that have been charging consumers rates four to five times those in the United States.

"Re-Emergence of Prewar Economic Blockade," and "Down With Coercive U.S. Diplomacy" were among the anti-American graffiti sprayed on the walls of Motorola's headquarters in downtown Tokyo earlier this month after America threatened to impose trade sanctions on Japan.

Since the White House threatened sanctions, "all of us have come to hate America," said journalist Toshiaki Ohno of other Japanese reporters covering telecommunications. "The role of Japanese consumers isn't to boost profits at American companies."

The intensity of Japan's response to American pressure is a symptom of the economic nationalism that bubbles up a little more fiercely here each time there is a trade dispute between the two economic powers. It also underscores the depth of the gulf that divides Japan from the West on just what constitutes free trade and what Japan must do to open its economy. The agreement reached between the United States and Japan Saturday allows Motorola Inc. to compete on equal footing with Japanese companies in providing cellular phone service in the heavily populated region stretching from Tokyo to Nagoya. Motorola had maintained that its local partner, Nippon Idou Tsushin Corp. (IDO), had thwarted sales in the coveted, 155-mile corridor.

Even so, an outbreak of American-style competition among cellular companies in Japan seems unlikely.

Delays already have provided Japanese suppliers with the crucial lead time necessary to bring their costs in line with Motorola's. And by the time IDO's Motorola network covers most of Tokyo 18 months from now, it will face additional competition from new companies offering digital services--some of them beneficiaries of a new Japanese government low-interest loan program.

In the meantime, the Japanese government is taking steps to prevent cellular phone prices from falling too rapidly.

And Japanese consumers are not ready to fight for lower prices if it means that increased competition will damage Japanese firms that employ family members and friends.

The attitude of Tokyo businessman Asahio Goto is typical. "We Japanese are sympathetic to NTT (the national telephone monopoly) because they have so many employees they have to support," he said.

Though he would use a cellular phone if prices fell, Goto is stoic about doing without the luxury: "I make do with a pager."

Given the unchanging nature of Japanese institutions and attitudes through Japan's long effort to catch up with the West, some experts doubt the cellular phone pact will change the Japanese marketplace very much. Japan expert Chalmers Johnson sees such concessions by the Japanese less as progress toward an open market than as a "smoke screen to buy time," doing little to change the ways of the Japanese economy.

America's hopes for genuine change in Japanese trade practices arose from the fall last July of the Liberal Democratic Party, one of the three sides of the iron triangle that has ruled the country for three decades.

But the two other powers--industry and bureaucracy--have remained as an even more powerful iron axis that continues to favor industry interests over those of consumers and local producers over foreign producers.

It is the bureaucrats who were up late trying to find ways to appease Motorola's demands. And it is the bureaucrats who will move the levers of the economy to try and lower Japan's attention-getting trade surpluses. That won't necessarily mean more American imports. One likely solution: shift the surpluses to Asia, countries by assembling more products in Southeast Asia and China for re-export to America and the rest of the world.

When Japan began offering cellular phone service 14 years ago, it was bureaucrats in the Ministry of Post and Telecommunications (MPT) who required that all phones be leased, enabling service providers to set high prices for phone rentals. Today, while American cellular providers subsidize the sale of phones to encourage their use--allowing stores to sell them for as little as $50--Japanese companies rent the phones for $80 a month and more. Until recently, NTT even required consumers to pay a $952 deposit for each phone rented.

During Japan's economic bubble in the late 1980s, cellular sales grew in spite of the high cost. Image was everything, and there was nothing quite as striking as being seen using a cellular phone.

When the economy dipped in 1991, however, so too did growth.

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