U.S. Aides Urge Japan to Ease Its Investment Policy
Deputy Treasury Secretary John E. Robson assured Japan twice on Thursday that the Bush Administration will keep America’s doors open to Japanese investment but warned that lack of Japanese reciprocity will create U.S.-Japan political friction.”
“The situation is . . . fragile,” he said. “We are fervently in favor of an open investment policy in the United States, but . . . the fact is that the investments by Japanese investors have created a political stir,” Robson told a breakfast meeting of the American Chamber of Commerce here.
Arriving from South Korea, Carla A. Hills, U.S. trade representative, chimed in with the same theme in a television interview.
She said Sony’s $3.4-billion purchase of Columbia Pictures showed “how easy” it is for a Japanese firm to buy a company in the United States and noted by contrast “how difficult it would be for an American company to make a similar-type purchase in this country.”
“One of our goals is to have open investment,” she told NHK, the quasi-governmental national radio and television network.
At a Foreign Correspondents Club lunch, Robson was asked to predict how long it will be before an American company will be able to buy a $3.4-billion Japanese corporation.
“I don’t know the answer,” Robson said. “You would hope the opportunity would be present . . . to buy a Japanese company of whatever size.”
Asked to explain the basis for his “hope” when only 30% of the shares of Japanese firms are ever traded on the Tokyo stock market, Robson said: “I’ve always been an optimist.”
He noted that the United States has raised the issue with Japan of “how do you get a piece of the Japanese action when . . . 70% of the shares of Japanese companies are held by friendly shareholders who are the network of suppliers, customers and subcontractors” of the companies in which they hold stock.
“Finding a way to get into that system is not easy,” he said.
However, even without an opening of foreign investment opportunities here, the Bush Administration is “determined” to keep the doors open, Robson said.
“Alexander Hamilton, who was the first secretary of my department, said foreign investment in the United States was a good thing because . . . it brought to the United States economic benefits that otherwise wouldn’t be there,” he said. “The Bush Administration is committed to keeping that policy.”
Noting that foreign direct investment in the United States, now around $350 billion, had risen dramatically in recent years--with investments by Japanese doubling from 1986 to 1988--Robson said: “The perception by American politicians and businessmen that the other side isn’t as open (as the United States) is the primary fuel (creating) political problems.
“But the solution in my judgment, and in the Bush Administration’s judgment, isn’t to shoot yourself in the foot and foul your own nest in an attempt to liberalize the investment abroad,” he said.
Robson said reaffirmation that the United States will keep its doors open to Japanese investment “was one of my missions here.”
The others, he added, were to solicit Japan’s help in curtailing the laundering of drug profits through the international banking system and emphasizing to Japan the importance of bringing negotiations on removal of structural impediments to trade to a successful conclusion.
“The consequences of failing to deal with these issues could be grave,” he said.
Hills, meanwhile, complained to Construction Minister Shozo Harada that widespread collusive bidding by Japanese firms was keeping American companies out of the construction market. She urged Japan to strengthen the enforcement of its anti-monopoly rules and presented a five-point proposal to improve procedures in bidding for construction contracts.
She also complained to leaders of Keidanren (Federation of Economic Organizations) that Japanese corporations, on average, buy 90% of their production goods and 80% of their capital goods from the same sources. She charged that such purchasing patterns are exclusionary.
