JAPAN

Aviation Dispute Heats Up: A dispute between the United States and Japan over airline access rights could be the next battleground in already sour trade relations between the two countries, according to U.S. government sources. The Department of Transportation ruled last week that Japan had violated a bilateral aviation agreement, and threatened to retaliate. It was the first aviation action by the Clinton Administration and signaled that Washington intends to defend its airlines in the international arena. The dispute, festering for years, broke out in September, when the Japanese set limits on the percentage of passengers that could be picked up in Tokyo and transported to Sydney, Australia. It rejected the Sydney leg of a proposed United Airlines route linking New York, Tokyo and Sydney. On Nov. 5, United filed a complaint with U.S. transportation authorities, and subsequent negotiations failed to change any minds, leading to last week’s threat of retaliation. The stakes are high for both countries. Airline officials have said that the Japanese for years have been unhappy about the bilateral agreement with the United States, completed in 1952. The United States, which has a large deficit overall with Japan, enjoys a trade surplus with Japan in the area of aviation and is troubled that Tokyo has decided to take measures that potentially could reduce it.