Tokyo Agrees to Open the Door for Sales of U.S. Supercomputers : Trade: The tentative accord, which will give U.S. firms a chance to bid on Japanese government contracts, eases a main friction point.
U.S. and Japanese negotiators reached tentative agreement early Friday on a plan to resolve U.S. complaints about Tokyo’s refusal to buy American-made supercomputers--one of three specific trade disputes about which Washington is threatening to retaliate.
The accord, which still awaits final approval by both sides, is designed to revamp government procurement procedures in Japan to eliminate practices that previously have given Japanese supercomputer manufacturers a decisive edge over foreigners in bidding for Japanese government contracts.
Senior U.S. officials reacted cautiously to the new agreement, insisting that they would wait until late June to “see how the accord works in actual practice” before deciding definitely whether to end any threat of U.S. trade sanctions in the case.
Nevertheless, U.S. negotiators noted pointedly that the Japanese seemed unusually eager to settle the U.S. complaint--a move they attributed to intensified pressure from President Bush during his meeting with Japanese Prime Minister Toshiki Kaifu in Palm Springs on March 2 and 3.
U.S. Trade Representative Carla A. Hills said the accord “should give us full and effective access” to bidding by the Japanese government for supercomputers and related equipment.
The refusal of the Japanese government to consider U.S.-made supercomputers in its purchases has long been a thorn in the side of American trade officials. Private corporations in Japan have purchased American-made supercomputers for years, but U.S. firms have been unable to crack the government procurement market there.
Industry analysts have estimated that U.S. manufacturers could sell as much as $130 million worth of supercomputers to the Japanese government if its bidding procedures were fully open. The major U.S. manufacturer of supercomputers is Cray Research of Minneapolis. Supercomputers, which can cost $30 million each, are extremely fast machines capable of performing unusually complex calculations. They are mainly used in large-scale research projects.
The dispute involving supercomputers is one of three unfair-trade-practices complaints that the United States filed against Japan last year under the Omnibus Trade and Competitiveness Act, the tough new trade legislation that Congress enacted two years ago.
Under the law, the Administration has just over a year to negotiate a solution to any trade complaints that it files. If the foreign country involved refuses to meet U.S. demands, the Administration is obliged to retaliate by imposing trade sanctions against that country’s imports here.
Besides the dispute involving supercomputers, the Administration filed two other specific trade complaints against Japan last year, involving Japanese restrictions on sales of U.S.-made satellites and on imports of American lumber products.
U.S. negotiators say it still seems possible that Tokyo will come up with an acceptable compromise affecting lumber products, but the dispute over trade in satellites appears to have hit an impasse. Japan contends it ought to have its own satellites for national security reasons.
Under the accord reached early Friday, Japan has agreed to revamp its government procurement practices to buy supercomputers on the basis of both price and performance, rather than price alone as had been the case in the past.
It also has promised to write specifications for supercomputers that consider the actual speed with which a machine can complete a task, rather than base its choice on a theoretical “peak performance” estimate that Americans say has failed to take account of superior U.S. quality in supercomputers.
And it has pledged to estimate contracts using private-sector prices, rather than an artificial standard; to offer extra credit for performance that exceeds government specifications, and to allow U.S. firms to bid on orders for custom computers.
