Motorola’s Washington Lobbyists Keep Heat on Japanese Trade
The company’s lobbying operation here is laden with former U.S. trade negotiators. Officials who once hammered out U.S.-Japan trade deals are now touting the firm’s interests in determining how they are enforced.
All this may sound familiar. Foreign firms such as Hitachi and Toyota, seeking greater influence in Washington, have latched onto dozens of former U.S. officials who have left the government for greener pastures.
But in this case, there is a difference. This revolving door leads into the offices of an American firm--Motorola Inc., the electronics maker based in Schaumburg, Ill. In fact, two members of the company’s “family” have won key posts in the Commerce Department.
A rarity among U.S. manufacturers of consumer products, Motorola has aggressively tapped government agencies for its strategists and lobbyists and sent them off to pressure their former colleagues on behalf of their new employers.
“Motorola is just about the only American corporation that really goes about that very aggressively,” said Paul Freedenberg, who recently left his job as undersecretary of commerce to join a Washington law firm. “So far, it’s mostly been Japanese companies that have been doing that.”
Interest Has Grown
Freedenberg calls Motorola’s aggressive posture “a perfectly understandable response” to Japan’s lobbying effort here and attributes it mainly to “corporate personality.” Robert W. Galvin, who took over the firm in the mid-1950s, became interested in Japan then because his firm was asked to help revive Japan’s war-torn economy by buying more Japanese-made goods.
Since then, Galvin has become more and more interested in international trade, building Motorola into a worldwide exporter of a broad range of electronics and telecommunications equipment. Over the years, the company has been one of the few U.S. electronics makers to have tried to market its goods in Japan. And it has become increasingly active in Washington.
The strategy has paid off handsomely. Under pressure from Motorola, the United States launched negotiations with Japan in 1985 that blasted open Tokyo’s complex network of trade barriers against switching equipment and other telecommunications equipment.
Along with Texas Instruments, Motorola was a major force in engineering and shaping the efforts by the U.S. trade representative’s office in 1986 to hammer out an accord with Japan designed to end predatory pricing and open the Japanese market to the sales of semiconductors.
In 1987, again largely at Motorola’s insistence, the United States imposed its first formal sanctions on Japan--an important turning point in U.S.-Japanese trade relations--ostensibly for violating the 1986 semiconductor accord. The sanctions included 100% tariffs on about $300 million worth of Japanese imports.
Administration Prodded
And early last month, the White House announced that the United States would impose additional but still undetermined sanctions on Japanese goods for Japan’s failure to live up to a 1987 accord requiring it to open its markets to U.S. telecommunications products such as cellular telephones and mobile radios. Only one U.S. company had been seriously impeded by the Japanese intransigence: Motorola.
The well-worn path between Washington and Schaumburg dates back to 1981, when Lionel Olmer, then a Motorola executive, joined the Reagan Administration as an undersecretary of commerce. Long frustrated by Japan’s myriad regulations and import barriers, Olmer pushed the Administration to challenge them.
That, in turn, got other government officials--and Congress--interested in placing high-technology items high on the U.S. trade agenda, and Motorola’s influence in Washington has been broadening ever since.
Ironically, Olmer, a partner in a Washington law firm, is now representing Japanese clients. But Motorola has developed a host of new links to policy-making circles in Washington.
The firm hired Veronica A. Haggert, a well-connected former member of the U.S. International Trade Commission and a one-time staffer in the U.S. trade representative’s office, as director of international trade relations for its Washington office.
Richard Heimlich, Motorola’s director of international strategy in Schaumburg, was once a senior official in the trade representative’s office and, before that, the Commerce Department. And James Gradoville, a middle-level staff member of the trade representative’s office who was instrumental in drafting both the semiconductor and telecommunications accords, works in Motorola’s Washington office.
Can Join Lobbyists
A few weeks ago, when Motorola was pressing the Bush Administration to target Japan for new sanctions in the telecommunications case, it hired Steptoe & Johnson, a Washington law firm, to make the rounds. Michael B. Smith, who until early this year had served as deputy U.S. trade representative and had been the driving force in negotiating the agreements with Japan, accompanied Steptoe’s attorneys as a consultant.
Although Smith is technically prohibited from lobbying at his former agency for a year after leaving office, the law does not bar him from accompanying Steptoe & Johnson lobbyists on visits to the Commerce Department, where Smith is equally well known and able to project a voice of authority on the trade accords he negotiated.
And now two other members of the Motorola family have been named assistant commerce secretaries. Michael Skarzynski, a top Motorola executive, will head the department’s office of trade development, while Michael Galvin will be chief of the branch that administers trade laws. Galvin is not actually on Motorola’s payroll, but his father, Robert, owns the company.
As even Motorola’s opponents concede, there is nothing illegal about the increasingly close links between Motorola and Washington’s trade policy-making establishment.
“The fact that they have former government people on the payroll is not a big issue,” said Stanton D. Anderson, a Washington lawyer who has frequently been criticized for representing Japanese companies. Motorola may be influential, he said, “but no more than any industry that has been dominant in its field.”
Government Supportive
Smith finds nothing wrong with the close relationship between the trade representative’s office, where he used to work, and such U.S. companies as Motorola.
“They’ve been very active for a long time, and I would say that by and large the U.S. government has been very supportive,” Smith said. “They have used the law to petition the government to go after other trade barriers.”
Freedenberg, the former undersecretary of commerce, says Motorola’s relationship with the government falls short of a worrisome link between private and public interests. “The danger is if somehow they have an undue influence on where the government’s going,” he said. “But that’s a judgment call that people have to make.”
Not everyone would agree that what is good for Motorola has been good for America. The State Department argues that lashing out at Japan with formal trade sanctions risks alienating the one ally that America will need most in Asia for the foreseeable future.
More specifically, American firms that use microchips in manufacturing other products have charged that the 1986 semiconductor accord worsened a shortage of chips in late 1987 and 1988, sending chip prices soaring and making U.S. computer manufacturers uncompetitive.
Moreover, Washington’s decision to retaliate against Japan in the semiconductor case in April, 1987, helped send the stock market plummeting over fears of growing U.S. protectionism.
And as for the forthcoming sanctions likely to be imposed in response to Japanese telecommunications barriers, they will not be painless in the United States.
Oppose Sanctions
Representatives of more than 50 U.S. firms that manufacture everything from cosmetics to chemicals crowded into a hearing room at the U.S. International Trade Commission this week to ask the Administration not to impose its punitive tariffs on Japanese products that they use in their own businesses.
“We are seriously concerned about the propriety of imposing sanctions so broadly when the problem concerns so narrow a segment of an entire industry,” said Edwin B. Spievack, president of the North American Telecommunications Assn., which represents some 750 manufacturers and suppliers.
Spievack warned the hearing panel that if the Administration, as expected, imposes sanctions, “the American consumer and American businesses--many of them in small businesses--will be forced to bear penalties greater than those Japan may experience.” Broad retaliation now, he concluded, “would be out of all proportion” to the offense.
The Administration is expected to decide which imports to target within a few weeks. In the meantime, negotiations with Japan are continuing in an effort to resolve the dispute without resort to penalties. Motorola President George M. C. Fisher was in Tokyo last week trying to hammer out a compromise.
