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U.S. Strikes Deal With Japan to Open Markets : Trade: Breakthroughs in four key areas are hailed as a genuine milestone. But Tokyo's failure to agree on auto-related exports could still lead to sanctions.

October 02, 1994|JAMES GERSTENZANG | TIMES STAFF WRITER

WASHINGTON — In a dramatic end to a tense round of trade diplomacy, the United States and Japan reached a series of agreements Saturday that Clinton Administration officials said would crack open the lucrative Japanese market for four major U.S. industries and generate billions of dollars in new exports.

Twenty hours of overnight negotiations, concluded only minutes before senior Japanese officials were about to return to Tokyo, produced surprising breakthroughs in every area under discussion with one significant exception: The two sides could not come to terms over autos and auto parts. These exports account for two-thirds of America's $60-billion annual trade deficit with Japan.

With no progress achieved on automotive issues--a senior trade official said the Japanese "weren't ready to be serious"--U.S. Trade Representative Mickey Kantor said he would take steps that could lead to the imposition of sanctions on Japan. The penalties, if imposed, would be intended to force Japan to increase its limited purchases of replacement parts made in the United States.

Prime Minister Tomiichi Murayama, speaking to reporters in Tokyo, said "it is extremely regrettable" that the United States decided to take steps toward sanctions over the auto parts issue.

"They were insisting that we relax our auto inspections," Murayama said. "But as we cannot relax safety (standards), we were not able to yield."

However, the auto parts impasse was overshadowed by the progress made on other fronts, as government officials and business executives cheered the sudden turnabout in an angry relationship that had been sliding toward the brink of a trade war.

The agreements will make it easier for insurance companies to do business in Japan, for manufacturers of medical and telecommunications equipment to sell their products to the Japanese government, and for makers of flat glass, used in automobiles and construction, to enter a lucrative market that had been virtually closed to them.

"This is a good deal for the United States and a good deal for Japan," observed Kantor, a view he said was shared by President Clinton.

In the view of U.S. officials and outside trade experts, Saturday's breakthroughs represent a genuine milestone. After nearly 15 months of bickering, the two countries, whose trade relations produce ripple effects that span the globe, have agreed on a system to measure the success of foreign firms in gaining access to the Japanese market.

Japan has long been considered one of the most difficult markets to enter. Despite its government's assurances to the contrary, U.S. trade officials say, the door is barricaded by a combination of bureaucratic regulations, unofficial standards and other, often invisible, barriers.

Despite what U.S. officials have characterized as a history of backsliding by Japan on previous trade agreements, a buoyant Kantor said he is confident the new accords will stick.

"These agreements will not only work, they're results-oriented, they're tangible, they're concrete," said Kantor, who presided over nonstop negotiations that began at 3 p.m. EDT Friday and concluded at 11:05 a.m. Saturday. "They'll be effective."

Clyde Prestowitz, a former trade official and frequent critic of Japanese trade practices, said the agreements "put U.S.-Japanese relations on a new plane. It's a win-win proposition."

Prestowitz said the agreements should halt the dramatic rise in the value of the yen against the dollar, a phenomenon that has made Japanese products increasingly expensive in the United States. The Japanese currency began climbing to new highs against the dollar when a U.S.-Japanese summit fell apart amid bitter recriminations last February.

In addition, he said, Japan "gets credit internationally for being forward-looking and flexible."

Another prominent critic of Japanese trade practices, House Majority Leader Richard A. Gephardt (D-Mo.), said "another wedge was driven into the Japanese market" as a result of the new accords.

"It's clear when the U.S. really stands up, Japan opens up," Gephardt said. Even so, he added, the agreements "still only address a small percentage of our trade problems."

The senior members of the Japanese delegation, Trade Minister Ryutaro Hashimoto and Foreign Minister Yohei Kono, headed home immediately after the talks.

In a brief meeting with Japanese reporters, Hashimoto said the agreements would help smooth often-difficult U.S.-Japanese relations across the board. The goodwill should spill beyond trade to encompass political and diplomatic issues, he said.

Japanese officials emphasized that the agreements avoid setting specific "numerical targets," an initial U.S. objective that Tokyo had vowed for months to block.

But U.S. officials said the accords will make it possible to gauge the openness of Japanese markets. "The Japanese government for the first time is committed to use objective, quantitative and qualitative criteria to evaluate the progress made under these agreements," Kantor said.

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