Minimal Gains Are Reported on Auto Parts
U.S. and Japanese negotiators apparently reached no more than a face-saving trade agreement this morning, and it appeared to fall short of American demands for greater access to Japan’s auto, computer and other markets.
Despite relentless U.S. rhetoric and predictions of a protectionist backlash among Americans, the contents of a “global partnership plan” issued by the two nations today made clear that trade issues were resolved with only a minimal Japanese concession on the fractious issue of auto parts.
Noboru Hatakeyama, Japanese trade vice minister of international affairs, told Michael Farren, U.S. undersecretary for international trade, that $19 billion is the most that Japan can promise to buy from U.S. auto parts makers.
That figure is not significantly higher than the $17 billion the Japanese pledged last November and far short of the $27 billion the Americans initially demanded.
At a joint news conference with Prime Minister Kiichi Miyazawa, President Bush described as “very productive” his visit to Japan as part of an Administration claim that the accord marked an important first step in increasing U.S. access to Japanese markets and creating American jobs.
“This visit has been a success,” Bush insisted, contending that it will translate into “jobs and economic growth.”
But the tangible commitments made by Japan today did not go much beyond what Tokyo had already promised in what was sure to be a disappointment to a Bush Administration that had sought concessions that could more clearly shrink the $41 billion U.S. trade deficit with Japan.
Instead, Japan vowed for the most part to “redouble” its efforts to increase U.S. access to a wide range of markets, including paper products, glass and legal services.
A tentative agreement allowing foreign bids for a larger number of Japanese government computers was also announced today as part of the so-called economic action plan. However, it did not appear that the United States had won any guarantees that foreign computer makers would win a larger share of the market for Japanese government computer purchases.
Even as the two sides put the finishing touches on the two documents, Treasury Secretary Nicholas F. Brady was renewing U.S. complaints about the Japanese trade stance.
“I must be frank in saying there are problems in our economic relationship,” he said in delivering a speech Bush was to have given before being taken ill. “Japan’s trade surplus is too high and its market access is too restrictive.”
In their efforts to secure increased access to Japan for American companies, Administration officials also were clearly raising the specter of tougher times if Japan fails to comply with U.S. trade demands, with not-so-subtle references to Democratic pressures for more protective measures.
A bill now pending in Congress would impose new barriers against Japanese products unless Japan reduces its trade surplus with the United States. While the White House has firmly rejected that approach, Bush and his advisers seem to have no qualms about using the Democrats as a bogeyman to jolt the Japanese.
“A collapse of the open trading system would perhaps hurt Japan more seriously than any other major industrial nation,” National Security Adviser Brent Scowcroft said. “If Japan had to depend exclusively on consuming its own industrial products, the Japanese economy would change dramatically.
“Isolationism and protectionism must remain the sleeping ghosts of the past, not the waking nightmares of the past,” Brady told the luncheon of the Japanese welcoming committee. The speech was to have been Bush’s major policy address here.
Earlier Wednesday, five major Japanese auto makers announced plans to increase their purchases of U.S. auto parts to $17.8 billion by 1994. It was unclear whether they then later further upped their figures or whether the last Japanese proposal of $19.1 billion includes concessions from other Japanese auto makers.
The specific targets, although termed “voluntary,” appeared to usher in an era of managed trade, in which goals and numbers take precedence over simply removing barriers to free trade.
Such “managed trade” has generally been regarded as heresy among free-trade Republicans. Although the Reagan Administration, in talks led by former Commerce Department official Clyde V. Prestowitz, negotiated target numbers for semiconductors in the mid-1980s, the agreement for a 20% market share was kept confidential. Bush himself opposed managed trade when he took office three years ago.
But it appears that the American recession and electoral politics have converted Bush and brought managed trade out of the closet as a Republican trade policy tool.
Japan and the United States have been wrangling over the auto parts issue for some time.
In November, the Japanese proposed to markedly increase their purchases of U.S. auto parts over the 1990 level of $10 billion. The Japanese said they would buy $17 billion worth of U.S. parts; the Americans insisted they buy $27 billion worth.
Most of the American auto parts to be purchased would be used in Japanese-controlled factories in the United States.
Japan’s No. 1 auto maker Toyota pledged to double its purchases to $5.28 billion from $2.6 billion. The figure includes $3.8 billion of local procurement for its U.S. facilities and $1.46 billion of imports. Nissan agreed to nearly triple purchases to $3.7 billion from $1.3 billion. Honda’s target was $4.9 billion from $2.7 billion; Mitsubishi’s was $1.6 billion from $682 million, and Mazda agreed to boost U.S. purchases to $2.3 billion from $1.1 billion.
The Japanese auto makers also announced plans to help sell 19,700 cars manufactured by the Big Three U.S. auto makers through their sales networks in Japan. Toyota, for instance, pledged to bring in 5,000 autos from General Motors.
But Japanese auto executives voiced displeasure over the concessions--and questioned whether U.S. cars really could sell in Japan.
While talking tough, Bush also acknowledged the U.S. auto industry’s faults. He told Miyazawa that Americans should reflect on why European vehicles outsell U.S. autos in Japan.
Indeed, an announcement Wednesday that U.S. auto makers are finally planning to introduce cars with right-hand steering wheels--years after first trying to enter the Japanese market--seemed to reinforce Tokyo’s contention that the Big Three have failed to adapt their products to local consumer habits and tastes.
Still, U.S. officials delivered more saber-rattling than reflection. One high-ranking source said that Bush had told Miyazawa in polite terms that “there was a feeling on the part of the American people that they were not being fairly treated in terms of access to the Japanese market.” This official, who participated in meetings with the President, said that Bush warned Miyazawa of the “political realities that go along with the American people feeling that way.”
Times staff writer Leslie Helm contributed to this story.
GM CARS FOR JAPAN: Toyota said it is prepared to negotiate sales. D1
