Some U.S. Demands Not Met : Japan OKs Final Steps to Ease Trade Barriers

In the face of a threat by the U.S. Congress to take retaliatory trade action against Japan, Prime Minister Yasuhiro Nakasone today approved the final steps in a three-year “action program” to open up Japan’s markets.

Declaring that “a reformation of the people’s minds is necessary” to promote imports, Nakasone said new policies to enlarge domestic demand to help pull in imports will be worked out in the near future. To date, he had followed a “tight budget” policy, which has helped constrain growth.

Nakasone also pledged, in a written statement, to make Japan “one of the most open markets in the world.” Toshio Komoto, minister of state in charge of external economic affairs, went one step further, declaring four times in a news conference that the measures approved today “will make Japan the world’s most open market.”

Eighty-seven reforms were announced to simplify Japan’s complicated standards, certification and import procedures, a frequent focus of foreign complaints.

Car-by-car inspection of imported vehicles will be eliminated, as will a requirement, apparently unique to Japan, that cars be equipped with a parking light for use when the engine is not running. And it will no longer be necessary to take cars to an office of the Transportation Ministry for inspections; inspectors will go to the showrooms.

A Foreign Ministry official, who asked not to be identified by name, said that the revised car inspection procedures will speed up certification from an average of one car an hour to about 33 cars a day.

A Major Demand

Added to the “action program” at the last minute was a pledge “to tackle in a forward-looking manner” the implementation of tariff reductions on imports of forestry products, including plywood, from April, 1987--a year earlier than Nakasone indicated in April the cuts would be started. Forestry products are one of four trade areas that the Reagan Administration has singled out for special emphasis.

For the first time, representatives of foreign firms will be appointed to all 22 of the government councils that set safety and quality standards for products. At present, representatives of foreign companies sit on only seven of these councils.

A foreign voice in the process of fixing standards has been a major demand of the Reagan Administration.

Import quotas will remain in place on 22 agricultural products. Also, the program fails to meet longstanding U.S. demands that American lawyers be permitted to practice in Japan and that foreign firms be permitted to acquire seats on the Tokyo Stock Exchange. And no date was set for allowing market forces to determine interest rates in Japan’s financial market, as the United States has urged.

The so-called action program constitutes the final portion of the fifth “market-opening package” that Nakasone has announced since he became prime minister in November, 1982. In many cases, laws will have to be revised, but there has been no indication as to when the government intends to seek Parliament’s approval for the reforms.

Last month, Nakasone told members of his Liberal Democratic Party in Parliament that the action program would be “an important matter that will decide the destiny of Japan.”

Protectionist Pressure

The action program was assembled after three U.S. officials warned Keijiro Murata, the minister of international trade and industry, that protectionist pressure in Congress was building up to a point that the Reagan Administration might not be able to contain it. Vice President George Bush, Commerce Secretary Malcolm Baldrige and U.S. Trade Representative Clayton K. Yeutter all had urged Murata to include “bold steps” in the action program.

Baldrige told Murata that the action program would not meet American expectations if it failed to call for sacrifices on Japan’s part. However, no call for sacrifice was apparent in today’s announcement.

“This action program alone will not solve the problem” of Japan’s burgeoning trade surplus with the United States, which is running at an annual rate of $46 billion this year, the Foreign Ministry official said. “But improvements in access to our markets will help a lot.”

The program, he added, will not be Japan’s final word on improving access to its markets. He said implementation of the action program will be “a dynamic, continuing process.” Yet Nakasone has promised no further moves.

Other new procedures covered by the action program will reduce by 30% the number of notifications that importers must submit to the government before they can bring food products into Japan, the Foreign Ministry official said. Self-certification procedures by manufacturers will replace government inspections for “about 146” electrical appliances, he said, leaving about 279 appliances subject to government inspection. Self-certification will also be permitted for 13 non-electrical products.

To speed up the disposition of import applications, deadlines for certifying foreign products will be set by each ministry. There is no time limit at present. If the deadlines are not observed, government agencies will be required to explain why they are withholding certification, the official said.

And he said the government also decided to add 16 agencies to its list of 45 government entities covered by a procurement agreement under the General Agreement on Tariffs and Trade, opening up an additional $330 million a year in government purchases to bidding by foreign firms. Until now, he said, only $1.3 billion of total government procurement of $3.4 billion has been covered by GATT.

In another departure from past practice, the bidding will be made public, he said.

Japan’s Export-Import Bank will offer financing for imports of manufactured goods at interest of 6.5%, which is six-tenths of a percentage point lower than customary rates.

A statement issued by the Ministry of International Trade said the promised reforms involving standards and certification procedures will make Japan’s market more open than those of other countries.

Among the moves to liberalize Japan’s financial market were promises to deregulate interest rates on large deposits (of more than 1 billion yen, or $4.16 million) in the spring of 1987, to create a bond futures market this fall, to allow yen-denominated banker’s acceptances--negotiable money drafts--to be handled by securities firms beginning in April, 1986, and to permit transactions without collateral in certain short-term money markets.

On the key issue of deregulation of small-deposit interest rates--a point that U.S. Treasury Department officials have said is vital to a truly free financial market--the government said only that it will continue to study the matter.