U.S. and Japan Break Off Talks on Contractors

U.S. and Japanese negotiators broke off four days of talks Saturday after failing to agree on a scheme to allow foreign contractors limited participation in Japan’s lucrative public works market.

Officials from both sides said some progress was made in easing procedures for bidding and licensing, but negotiations reached an impasse over how many large-scale projects would be open to foreigners under a plan first proposed by Prime Minister Noboru Takeshita when he visited Washington last month.

The aim of Takeshita’s proposal was to help foreign companies get enough local experience to learn the customs of Japan’s arcane construction industry and compete successfully, without assistance, in the future.

‘Insufficient’ Offer

But a senior U.S. government official said Saturday the six projects offered by the Japanese are “insufficient” for that purpose. Some of them already have advanced beyond the design and engineering stages, aspects of the work in which American bidders would be highly competitive, he said.

Moreover, foreigners remain effectively barred from work on the terminal buildings at two airports on the list. The Japanese government maintains it cannot influence the private companies that already have been awarded prime contracts for the facilities. That leaves open only runway construction.

“American firms are not going to be in the best competitive position to come in and move dirt,” said the U.S. official, who spoke on the condition he not be named.

The U.S. delegation, led by Michael J. Farren, deputy undersecretary of commerce for international trade, demanded that a total of 14 public works projects be covered when negotiations opened Wednesday. But the Japanese, represented by officials from the Construction, Transport and Foreign ministries, refused to compromise.

‘A Kind of Practice Run’

“We’re looking at these six projects as a kind of practice run before takeoff,” a Foreign Ministry spokesman said Saturday. “Americans first have to know what the construction industry is all about in Japan.”

U.S. officials, however, characterized the present negotiations as a one-time opportunity for American companies to get a foothold in the public works market here. As such, too many qualified contractors would be denied access, they said.

“If this is a take-it-or-leave-it list, then we’re going to have to leave it,” the senior official said.

Talks could resume as early as this week, possibly in Washington. Meanwhile, Japanese construction companies bidding on federally funded public works projects in the United States remain liable to retaliatory sanctions under the trade law Congress passed in December.

$7.7-Billion Airport

The insular Japanese construction industry became a focus of U.S.-Japan trade friction two years ago, when the Commerce Department began complaining about closed bidding procedures at the Kansai International Airport, now under construction near Osaka in southwestern Japan.