Trade Official’s Effort Fails : U.S. Will Go Ahead With Tariffs on Japanese Goods
A top Japanese trade official failed Friday in a last-ditch attempt to convince the Reagan Administration that Japan is not violating a year-old agreement by allowing Japanese companies to dump semiconductor chips on the world market at less than market prices or by refusing to open its market to U.S.-made chips.
The immediate result will be that the United States will go forward with President Reagan’s announced plan to impose 100% retaliatory tariffs on a wide range of Japanese high-technology products in the U.S. market beginning next Friday. This will represent the most severe punitive trade measure that any Administration has taken against Japan since World War II.
After about 13 hours of negotiations over the last two days, the office of the U.S. trade representative, at the direction of the deputy representative, Michael B. Smith, issued a brief sta1952804197not, in our view, produce any basis to call into question the accuracy of the data concerning market access or third-country dumping upon which the President’s decision of March 27 was founded.”
Appear Glum
The Japanese delegation, led by trade official Makoto Kuroda, declined to say anything to reporters as they left the final round of talks. The Japanese appeared glum. One of the U.S. negotiators, Undersecretary of Commerce Bruce Smart, said with a shrug that the talks “were very interesting.”
When asked if there was a chance that negotiations could be resumed before next Friday’s deadline for imposing the tariffs, Smart replied cryptically: “Tomorrow is Saturday and next week is next week.”
However, despite the outward impression that the two sides remained completely at loggerheads, officials hinted quietly that the two-day session may have laid the groundwork for future Japanese compliance with the semiconductor agreement, perhaps a few months from now.
‘Most of the Talking’
Sources close to the negotiations said that Kuroda, the vice minister of Japan’s powerful Ministry of International Trade and Industry, “did most of the talking” during the two days in an effort to convince U.S. negotiators that Japanese chip dumping was being controlled and soon would stop.
If the Commerce Department and the U.S. trade representative decide that Japanese chip manufacturers are no longer violating the pact, the Administration could cancel the $300 million in tariffs Reagan announced March 27.
To underline the Administration’s current get-tough-with-Japan policy--in part crafted to head off still more protectionist demands from Democrats in Congress--the Administration has designated a vast array of imported high-tech products, with an import value of about $1.7 billion, as possible targets of the new 100% punitive tariffs. Tariffs on most of those products are now 5% or less.
Hearing Monday
The products include commercial films, computer floppy discs, disc drives and other computer parts, many of which are manufactured by companies that have nothing to do with semiconductor chips. A public hearing is set in Washington on Monday at which a long list of Japanese firms, U.S. distributors and U.S. companies dependent on imported high-tech components are scheduled to testify in hopes of getting the target list substantially reduced.
Smith, the deputy U.S. trade representative who headed the U.S. team in the place of Trade Representative Clayton K. Yeutter, maintained that an unusually large sampling of the international semiconductor chip market during February--amounting to 22% of the global market outside Japan and the United States--yielded incontrovertible proof that Japanese companies were selling chips below cost in violation of the July, 1986, agreement.
A similar survey also was taken in March, but the results are still to be evaluated. Trade specialists speculated that the U.S. negotiating team would have been especially careful to spell out for Kuroda the range and quality of evidence that would be necessary for the Japanese to prove that the dumping had stopped.
Restate Belief
However, a statement issued by the U.S. team late Friday said that during the talks “the U.S. delegation restated the U.S. belief that the agreement has not been enforced.”
It explained to Kuroda’s team “that concrete evidence is needed that the dumping of semiconductors in third-country markets has ended and that Japan’s market is being opened to U.S. exports before the delegation would recommend that President Reagan alter his intention to impose sanctions on Japanese exports.”
Nevertheless, the statement ended on a faint note of hope that the agreement can be reinforced. “The United States does not want to terminate (the agreement). We are encouraged by recent Japanese actions aimed at changing semiconductor trading practices and hope this will lead to compliance by Japanese companies.”
No Time for Proof
Before the two days of talks, which had been requested by the Japanese, U.S. trade officials sought to downplay any expectations that they might succeed. Trade officials explained that there was no way that Kuroda could have assembled proof that dumping had stopped in time to head off imposition of the tariffs.
Indeed, on the eve of the first meeting, White House spokesman Marlin Fitzwater warned that “all indications are that (the tariffs) will take effect.”
Before leaving Tokyo on Wednesday, Kuroda told reporters that he had no new proposals to take to Washington but that he would tell U.S. officials that they had exaggerated the trade ministry’s power over Japanese firms.
He said he would try to explain that it would take time for exporters’ inventories of semiconductors to fall and for prices to rise. He also complained that U.S. semiconductor exporters are not aggressive enough in trying to sell in Japan.
