Japan Warns U.S. on Curbs on Its Firms : Construction: Tokyo says it will retaliate if Japanese companies are barred from government-funded construction work.

Japan said Tuesday that it will retaliate if the United States makes good on a threat to bar Japanese companies from its government-funded construction projects.

The United States said last week that it intended to bar the Japanese companies because talks had produced no agreement on a wider opening of Japan’s construction market.

Chief Cabinet Secretary Misoji Sakamoto said in a statement that if the sanctions were imposed, Japan will suspend special measures adopted in 1988 to make it easier for U.S. companies to enter the Japanese market.

The agreement followed charges that American companies were not being given equal access to Japanese construction projects, particularly public works.

The Japanese construction industry is accused of widespread bid-rigging, in which groups of companies allegedly consult to determine which of them will submit the winning bid, effectively excluding outsiders.

Sakamoto said the 1988 measures were adopted not because the Japanese market was closed but to help “foreign firms which are not fully familiarized with the Japanese markets.”

Under the 1988 agreement, Japan pledged to open 17 major public projects to U.S. construction firms by establishing new bidding processes. Under the new system, Sakamoto said, U.S. firms had won up to $440 million in business.

Sakamoto said that the two governments have met seven times to review the 1988 agreement and that they were approaching a final solution to the construction market issue.

“It is, therefore, hardly understandable for the U.S. government to announce such an intention (sanctions) at this particular moment,” he said.

The Bush Administration must decide soon whether to take retaliatory steps against Japan if it is not deemed to have opened its construction market sufficiently.

Many U.S. experts believe that the United States’ only hope of reducing its huge trade deficits with Japan lies in expanding the role that U.S. companies, including the construction industry, play in the Japanese economy.

In 1990, Japan’s sales in the United States exceeded U.S. sales in Japan by $41 billion, according to U.S. figures.