U.S. Wins Big Tokyo Concessions on Sale of Supercomputers

Negotiators today reported the first breakthrough in the long list of contentious trade disputes with Japan--an agreement designed to open the Japanese market to American-made supercomputers.

Officials at the U.S. Trade Office said negotiators from both sides bargained late into the night Thursday, hammering out details of the proposal.

The announcement represented the first breakthrough on a host of contentious trade disputes between the two countries.

The dispute over sales of supercomputers centered around American demands that the Japanese remove various restrictions that have effectively barred U.S. companies from selling supercomputers to Japanese universities and government agencies.

“If implemented, we think this will give us full and effective access to the Japanese government market,” said Timothy O’Leary, an official at the U.S. Trade Office.

Under the agreement reached during two days of talks in Washington, the Japanese promised to open up the procurement process for supercomputers to foreign firms and to base government decisions on purchases on quality as well as price.

The market for supercomputers was one of three areas targeted last year when the Bush Administration put Japan on a “hit list” of countries with the most onerous barriers to the sale of American products. Talks have also been proceeding on the two other products on the list--U.S. satellites and lumber products. But negotiators on those issues have reported that both sides remain far apart on American demands to open up those markets.

Still, there have been reports from Tokyo that Japanese Prime Minister Toshiki Kaifu is preparing an array of trade concessions in these areas as well.

Kaifu and President Bush met last month in California for a hastily arranged summit meeting where both leaders pledged to make greater efforts to reduce America’s huge $49-billion trade deficit with Japan.

Access to the government supercomputer market has long been a point of contention between the two countries. U.S. firms, in particular Cray Research Inc., have dominated the market for the sophisticated machines around the world but have been unable to sell their products to the Japanese government.

U.S. negotiators estimate that the potential for sales to the Japanese government is about $130 million annually.

Dennis McGrath, a spokesman for Cray, said his company will withhold its comment until reviewing the details of the agreement.

“We hope this is more than just a process thing, but something that will translate into sales in the marketplace,” McGrath said.

The Japanese are under pressure to make concessions on satellites, supercomputers and wood products before a June 16 deadline, at which time the Bush Administration will have the authority to retaliate by imposing higher tariffs on Japanese products.

The talks on specific industries are being conducted under a section of the 1988 trade law known as Super 301. The Administration is also conducting discussions on broader structural impediments.