U.S. Trade Office Is Playing Odd Role in Japan Politics

What does a prominent Japanese business leader do when he wants his government to revise a law that damages his overseas corporate interests?

He might be expected to petition representatives in Parliament or seek the aid of powerful bureaucrats. But in this age of economic interdependence, a new lobbying service is available to reform-minded Japanese: the U.S. Trade Representative’s Office in Washington.

Akio Morita, chairman of Sony Corp., discovered this last year. Morita, knowledgeable sources say, availed himself of this curious alternative in the politics of influence in an effort to seek better copyright protection in Japan for the huge inventory of sound recordings owned by Sony’s U.S. subsidiary, CBS Records, one of the world’s largest record companies.

Morita met U.S. Trade Representative Carla A. Hills and suggested that she apply pressure on Japan to revise its copyright law, which does not protect foreign recordings the same way it protects domestic recordings. He apparently neglected to make his views on the trade dispute known at home.

Asked whether Morita, or anyone at Sony, had ever contacted a Japanese official on this matter, a company spokesman said no.

“The answer is negative,” said Tsutomu Sugiyama, manager of Sony’s corporate communication department. “We have not sent out any official company request to the Cultural Affairs Agency or any other government agency regarding this matter.”

Morita’s appeal to the U.S. government was a rather unusual example of gai - atsu , or external pressure, an old trick in the convoluted world of Japanese policy decision making.

Ever since the postwar U.S. occupation, inside political and economic interests have discreetly encouraged pressure from abroad to accomplish structural and legal reforms too hot to handle--or take accountability for--on the domestic front.

Even the Structural Impediments Initiative talks, in which U.S. negotiators are cast in the role of arrogant meddlers interfering in Japan’s internal affairs, are moving in the direction of accomplishing structural reforms long sought by business circles here, acknowledged Kazuo Nukazawa, managing director of the Federation of Economic Organizations or Keidanren .

“We like their objectives,” such as tougher antitrust regulation and more rational distribution channels, Nukazawa said. “We just don’t like their high-handed approach.”

That touchy attitude was registered in “The Japan That Can Say No,” a controversial book that Morita wrote last year with Shintaro Ishihara, a right-wing member of the ruling party in Parliament. Both authors argued that Japan should stand up to America, be more assertive.

Embarrassed by the negative publicity that followed a bootleg English translation of the book, Morita has since distanced himself from his nationalistic co-author and refused to allow an official translation of his portion of the book.

The spat over the copyright law, meanwhile, was one of several unresolved bilateral trade issues--one that until late last week seemed destined to take the form of an unfair trade complaint under Section 301 of the U.S. Trade Law, which can in theory result in retaliatory sanctions.

The Recording Industry Assn. of America alleges that discriminatory treatment in Japan deprives its members (including CBS Records) of annual royalties of between $100 million and more than $1 billion. The current copyright law does not cover foreign recordings made before 1978--the year Japan signed the Geneva Phonograms Convention. Nor does it require the country’s approximately 6,000 compact disc rental shops to pay royalties on music recorded outside Japan.

The result has been a booming new industry in which pirate CDs are being sold at deep discount in Japan, without violating the law. And though Japanese record companies receive royalties from rental shops, their foreign counterparts are not compensated.

“There’s an insatiable demand for American music here,” Jason S. Berman, president of the Recording Industry Assn., said last week in an interview in Tokyo. “It’s an important economic activity, and we think we’re entitled to protection.”

Berman said he had been talking about the problem with Japan’s Cultural Affairs Agency and the Ministry of International Trade and Industry for the past 2 1/2 years, to no avail. Then last Thursday, at a multilateral trade meeting in Puerto Vallarta, Mexico, Japanese Foreign Minister Taro Nakayama suddenly assured Hills, the U.S. trade representative, that his government would attempt to revise the copyright law.

“It’s only now that we’ve explored the process of filing a trade complaint against Japan that the Foreign Ministry has stepped in,” Berman said in the interview.

Japanese officials say they plan to propose amendments that, if approved by Parliament next year, will extend copyright protection for foreign recordings back to 1968 and also guarantee rental royalties.

Although Hills had adopted the copyright cause as one of her top concerns, it is not clear whether the entreaty by Sony’s Morita played any role in getting the matter resolved. One veteran observer of U.S.-Japan trade negotiations believes that it did not, but was still struck by the irony of the situation.

“It takes a bit of cheek,” said the observer, who asked not to be identified. “Is Mr. Morita relying on the U.S. government to do all the work for him?”

Tomonori Kudo, manager of the copyright division in the Cultural Affairs Agency, sees things differently. He said neither Sony nor any other Japanese company had made any special appeal to change the law.

Kudo said revision of the law was already under study when the threat of the U.S. trade complaint cropped up. The fact that the Foreign Ministry had to intervene in the matter was strictly a matter of form, he suggested.

“It’s impossible to change the law on copyright protection with foreign pressure,” Kudo said. “It’s all based on international conventions anyway.”

Sugiyama, the Sony spokesman, said he thought that Morita probably raised the question of copyright protection with Hills out of his long-established concern for “free trade” and “improved bilateral relations” between Japan and the United States.

“You could say that as a result of this Sony will benefit,” Sugiyama said. “But that’s probably an ironic result.”