Japan Offers U.S. Package Plan to Improve Ties
Japanese Foreign Minister Sosuke Uno, preparing for the first meeting between new Prime Minister Noboru Takeshita and President Reagan, Tuesday presented Secretary of State George P. Shultz with a package of proposals to improve U.S.-Japanese relations, including one that could open the door to American participation in large-scale public works projects in Japan.
Uno also pledged that Japan will bear the cost of all fringe benefits paid to some 22,000 Japanese workers at U.S. bases in Japan by fiscal 1990. And he indirectly signaled Japan’s willingness to lift import quotas on at least 10 farm products, an issue on which the Reagan Administration has placed a high priority.
The initiative drew a favorable reaction from U.S. officials. A senior Administration official, who asked to remain anonymous, said the improved access to public works projects “will meet what we want perhaps in the opening of the Japanese market to American bids and American firms,” but added, “That’s what we have to clarify.”
With Japan’s likely concession on the agricultural import quotas, “we feel that that matter is pretty well taken care of,” he said.
Takeshita, who arrived in Washington on Tuesday, is expected to meet with Reagan today in a three-day visit that will be his first major test in diplomacy since taking office in November. The visit, which also includes a speech at the National Press Club on Thursday and meetings with congressional leaders, is intended to ease tensions that have been aggravated by Japan’s trade barriers and its substantial trade surplus with the United States.
Before leaving Japan, Takeshita said he wants to convince Reagan that “Japan is a good partner of the United States” and said it was essential for him to “establish a close personal relationship” with the President.
“Our relations with the United States provide the very underpinning of Japan’s foreign policy,” he said.
In his stage-setting session with Shultz on Tuesday, Uno acknowledged for the first time that Japan had a de facto barrier to participation by American construction companies in large public works projects and said it was willing to negotiate a special agreement to remove the barrier.
“Japan maintains a principle of no discrimination between foreign and domestic companies in its designated bidding system for public works contracts,” Uno told Shultz, according to Koji Watanabe, director of the Japanese Foreign Ministry’s Economic Affairs Bureau. But because winning government designation as an eligible bidder on such projects “is based upon a record of results to date, there is an impediment for foreign companies,” Watanabe said in a press briefing.
Watanabe acknowledged that largely as a result of the requirement, very few American companies have been designated as eligible bidders and thus they have won virtually no bids on large public construction projects.
Late last year, Congress retaliated by approving a ban--which has not yet become law--on Japanese participation in federally funded public works projects in the United States.
On Tuesday, Shultz accepted a proposal by Uno to begin negotiations on new bidding policy specifications “to allow foreign firms to obtain designations so they can participate,” Watanabe said.
At least six multibillion-dollar projects, including construction of a bridge across Tokyo Bay, are planned in the near future.
Watanabe also disclosed that Uno promised Shultz a “clear-cut response” to U.S. demands that Japan lift quotas on 12 agricultural imports when the General Agreement on Tariffs and Trade (GATT) holds a general assembly meeting in February.
Last month Japan rejected a GATT ruling that 10 of the 12 quotas were illegal, but officials indicated that Uno’s remark suggests a reversal in that position.
The items include evaporated milk and cream, processed cheese, processed beef and pork, fruit juices, fruit puree, pineapples, tomato ketchup, glucose and caramel, starches, ice cream powder, peanuts and beans other than soybeans.
Shultz, Watanabe said, put the quotas at the top of a list of “individual items of interest” he presented to Uno for the meeting. Shultz cited “the importance of Japan opening up its market” to foreign goods, Watanabe said.
In a reversal of a policy upheld until Prime Minister Yasuhiro Nakasone stepped down two months ago, Uno also told Shultz that the Takeshita government will submit to Parliament a new agreement covering U.S.-Japan sharing of the labor costs of Japanese workers at U.S. bases in Japan. Nakasone’s government had refused to alter the current agreement, which limits Japan’s share of fringe benefit costs to half.
Under the proposal, Japan would more than double--to nearly $500 million--its payments for workers’ benefits in fiscal 1990, Japanese officials explained.
New Aid to Latin America
Uno also told Shultz that Japan will earmark $4 billion in new foreign aid loans to Latin America, a region of major interest to the United States where Japanese aid has been sparse. Uno said he plans to visit Latin America this year.
Two State Department officials, in interviews Monday, said the new prime minister has already carried out most of the broad policies the Reagan Administration has been urging upon Japan, including boosting foreign aid, promoting economic demand at home and raising defense spending. The officials, who asked not to be named, pointed to a pump-priming budget approved in December, which calls for a 5.2% increase in defense spending and a 6.5% boost in official development assistance.
Although the officials stopped short of predicting a dramatic decline in the U.S. trade imbalance with Japan--which is expected to amount to about $60 billion for 1987 --government and private economic forecasts announced in Tokyo have foreseen more domestic demand and less reliance upon exports for economic growth.
In his meeting with Shultz, Uno handed the secretary of state a “fact sheet” showing that the volume of trade between the United States and Japan has already “turned the corner,” Watanabe said.
Changes in the yen-dollar exchange rate, however, have prevented the turnabout from showing up in dollar-denominated figures, he added.