Japan Lashes Back at U.S. Criticism of Bidding Barriers : Trade: Tokyo is upset about a report to Congress that says collusion keeps American firms out of construction jobs.
The Japanese government Friday issued a sharp rebuke against U.S. Trade Representative Carla A. Hills, denouncing a report she submitted to Congress earlier in the week that criticized dango , or collusive bidding, in Japan’s arcane construction industry.
Ironically, Hills’ report was widely seen in the United States as conciliatory because she did not recommend retaliatory sanctions after her agency investigated allegations of unfair trade practices in the Japanese public works market.
But the Japanese side has protested the language of the report because it characterized the market here as relatively closed and said some policies of the Tokyo government “are unreasonable and burden or restrict” foreign competition.
“It is regrettable that, though not having dared to decide to resort to the imposition of sanctions, the (U.S. Trade Representative) concluded that ‘unreasonable’ practices are identified in the Japanese construction market,” Foreign Ministry spokesman Taizo Watanabe said in a prepared statement.
Watanabe called on the United States to take a “calmer attitude” and defended the “most sincere manner” in which the Japanese side has implemented bilateral accords aimed at opening up the construction market.
“The Japanese construction market has been open and non-discriminatory,” he said. “Since systems and practices of the construction market differ from one country to another, the participation (in) a foreign and unfamiliar construction market needs considerable efforts.”
U.S. construction companies making efforts to penetrate the Japanese market, however, have complained privately that they are shut out from competition for public works contracts because they fail to qualify in Japan’s “designated bidder” system, a Catch-22 that requires companies to have previous experience in Japan before they are deemed suitable to bid.
Hills, in her report, acknowledged that market access has improved considerably since construction became a bilateral trade issue several years ago and special market-access remedial measures were negotiated. But U.S. industry sources say it is still true that the only effective way to gain entry is to link up with Japanese partners in joint-venture arrangements.
Insiders note that public and private contracts are often awarded to foreign firms in an informal “affirmative-action” policy, much as contracts for federally funded projects go to minority-owned subcontractors in the United States and are thus not the result of free and open competition.
Hajime Sako, chairman of the Japan Federation of Construction Contractors, also criticized the U.S. Trade Representative’s report on Thursday. He said it will “discourage Japan’s efforts to solve the problem.” He added, though, that “we will continue to do our best.”
Americans have won about $65 million in Japanese public works contracts over the past 18 months in a market estimated to be worth about $300 billion a year, according to U.S. officials.
