U.S. Aide Sees New Chance for Japan Sales

New opportunities have already emerged for American telecommunications firms to increase annual sales to Japan from around $110 million last year to $1 billion within the next three or four years, a high U.S. government official said Friday.

The official, who insisted on not being identified, told American reporters that the transformation of state-owned Nippon Telegraph and Telephone Corp. (NTT) into a private-style company last Monday has made Japan’s telecommunications market “80% as open as ours.”

A wealth of new opportunities for U.S. firms already has opened up, the official said, despite the barriers being tackled in a new round of U.S.-Japanese negotiations aimed at reducing the number of Japanese technical standards and improving outside access to local decision-making.

This second set of negotiations for full access to the telecommunications market is scheduled to end no later than June 1.

‘Double or Triple’

Japan’s telecommunications market “could double or triple” in value in three or four years, with U.S. firms standing a good chance to gain a 15% market share within that period--or about $1 billion in sales, the official predicted.

The biggest opportunities, he said, will come in equipment sales and in running what are called “value-added networks” here (in the United States they are called “enhanced services”). Until last Monday, large-scale value-added services were an NTT monopoly.

Last year, the United States had a deficit of about $1.4 billion in U.S.-Japan telecommunications trade; U.S. firms sold only about $110 million worth of goods here, Japanese sold about $1.5 billion worth of telecommunications products in the United States.

Overall, the 1984 American trade deficit with Japan reached $36.9 billion, and will amount to at least $40 billion in 1985, the official said. He added that the $40-billion estimate is “the bottom of the range of predictions.”

U.S. Phones in Japan

In ending a 105-year government telephone monopoly, Japan did not go as far as the United States wanted in liberalizing its telecommunications market, he said. But “they have gone a long way,” he added.

Japan, he said, is one of only three countries in the world, including the United States, where homeowners now can purchase American-made telephones. The newly reorganized Nippon Telegraph and Telephone Corp. started selling two models of American-made phones this week.

The outlook for Japan’s buying its first American-made communications satellite--a point expected to be mentioned in Prime Minister Yasuhiro Nakasone’s fifth “market-opening” package to be announced Tuesday--has also brightened, the official said. Sale of a single satellite would be worth between $60 million and $300 million, depending on type and size, he said.

The U.S. official predicted, however, that Nakasone’s announcement Tuesday will bring few other reforms and that negotiations to gain full access to all of Japan’s markets will be a “never-ending” process.

Japanese Surprised

Japan, he said, was surprised by congressional passage of resolutions--and by the Senate Finance Committee’s approval of a bill--calling for retaliation against Japan if it fails to open its markets. But Japanese leaders, although “still not sure,” are beginning to think “it will blow over,” he said.

The best thing Japan could do to calm emotions in Congress, he said, would be to take “effective--and perhaps painful--market-opening measures,” but he said that such steps are unlikely Tuesday. The official said that “getting emotional” against Japan “doesn’t do the slightest bit of good,” and he advocated patient and consistent prodding “to keep the pressure on.”

(U.S. Ambassador Mike Mansfield struck a similar note in an interview in Washington with the Washington Post. The U.S.-Japan relationship, he said “is too important to be disrupted by a wave of emotionalism . . . too valuable, too strong, too precious to let differences of the moment create a situation which we will be sorry for in the future.”

(Mansfield said he is “disturbed at the way Japan is being made the scapegoat” for the United States’ $123-billion trade deficit, $36.9 billion of which resulted from trade with Japan. Mansfield urged Congress and the Administration to work together to solve the country’s own economic problems--the overvalued dollar, high interest rates and soaring budget deficits--that bear the major responsibility for the trade deficit.

(Ambassador Mansfield said the United States has achieved 90% of its objectives in talks to open the Japanese telecommunications market to American suppliers, and that the remaining 10% will be reached within three months, the Post reported.)

The U.S. official in Tokyo predicted that Nakasone’s package Tuesday will include an indication that Japan is prepared to move toward reducing 12% to 15% tariffs on imports of plywood, particle board, and veneer and 9% to 12% tariffs on kraft paper and liner board used to make boxes. The United States, by contrast, has demanded that Japan eliminate all tariffs on forest product imports, he added.

‘Substantial Progress’

The official made no predictions on what moves Nakasone might order Tuesday in the fields of electronics and pharmaceuticals-medical equipment, two other areas that the Reagan Administration has singled out for special emphasis.

Unlike many congressmen, who have dismissed trade negotiations with Japan as “meaningless,” the official, a 12-year veteran of dealings with Tokyo, asserted that “very substantial progress” has been made over the years in opening up Japanese markets.

In pharmaceuticals, despite a host of remaining obstacles, Japan has moved from a total ban 10 years ago on any foreign sales, except the licensing of technology, to “at least the opportunity” today to apply directly for approval of American-made pharmaceuticals and medical equipment, he said. Previously, American drug and medical-equipment firms had to hire Japanese agents to submit applications to sell their goods here, he noted.

The official also cited what he called the “success story” of caustic soda sales here. As a result of efforts made by Clyde Prestowitz, now an adviser to the secretary of commerce, American sales of caustic soda have increased by five times compared with 1981 exports of that product to Japan, he said.

About 770 American firms, more than ever before, are now resident members of the American Chamber of Commerce in Japan, with 200 others also doing business here--”not merely surviving but making profits,” the official said. More will come, he predicted.