Commerce Secretary Warns Japan Over Trade Pact : Deficit: Robert A. Mosbacher tells electronics executives in Irvine that the U.S. will take tough action if the agreement isn’t followed.
A top Bush Administration official warned Wednesday that Japan can expect tough action from the United States later this year if it fails to live up to provisions of a bilateral trade pact signed earlier this month.
Speaking to electronics industry executives at an Irvine luncheon, Commerce Secretary Robert A. Mosbacher predicted that the U.S. trade deficit will fall below $100 billion this year for the first time in seven years. The nation’s trade gap hit $113.2 billion last year, with Japan accounting for nearly half the total.
Mosbacher said in an interview that if Japan shows “a consistent pattern” of keeping foreign goods out of its market and if “the big changes we expect from the pact we signed recently do not come” by year’s end, then the Bush Administration may take retaliatory action against Japan. His remarks came hours after the government reported that the nation’s trade deficit shrank sharply to $6.49 billion in February, the smallest imbalance for a month in more than six years.
Last year, Japan was cited under Super 301 of the Omnibus Trade Law for unfair trade practices. Congress may take punitive action against Japan if investigations show that there is no marked improvement in opening its market to foreign products. A U.S.-Japan trade agreement announced two weeks ago is intended to reduce the $49-billion U.S. trade deficit with Japan.
“We will be monitoring (the agreement), and we know we’ll be making progress when the cash registers ring,” he said. “This is the first step of many to come.”
Mosbacher said the U.S. government does not view the trade pact as concessions on Japan’s part, but rather as “progress in an open market.” Although the United States would like to see many U.S. industries be able to sell their goods in Japan, the semiconductor and automobile components industries currently offer the brightest opportunities, he said.
Referring to Western Europe, Mosbacher expressed concern that standards set by European nations in such fields as engineering, chemistry and high-technology could bar American products from being sold in those nations.
“We will be there to make sure that U.S. standards are not excluded, and we will make sure that local content requirement is not so high that U.S. companies will have to set up operations there,” he said. Local content rules mandate that a fixed percentage of the parts contained in imported products be manufactured in the nation where they are sold.
Mosbacher said the Commerce Department will open a trade office in Brussels later this year to help American firms monitor changes expected by the planned 1992 economic unification of Western Europe.
Mosbacher, who spoke to members of the Orange County chapter of the American Electronic Assn., said Commerce and the Defense Department are working to streamline export regulations to make it easier to sell high-tech products abroad. He said the new regulations should be available for review by mid-June.
“We’re likely to see a higher level of verification (of) materials with potential military applications are concerned,” he said.
Mosbacher also reiterated President Bush’s eight-point program to make the United States globally competitive in the 1990s. This program includes reforms of product liability and antitrust laws and steps to improve the quality of U.S. education and American-made goods. Mosbacher added that the Bush Administration wants to make research and development tax credits permanent to encourage U.S. firms to plan for the long term and invest more in new product development.
After the luncheon, the commerce secretary held a closed-door meeting with top executives from Western Digital Corp., an Irvine computer company, to discuss exports of computers to Eastern Europe and the Soviet Union, according to a Mosbacher aide.
Mosbacher also visited a Fountain Valley computer factory of AST Research Inc. Last week, the Irvine personal computer maker became the first U.S. company to begin marketing a machine in Japan to compete directly with NEC Corp., Japan’s leading PC maker.
