Closed Japan Markets Vex U.S. Firms : Trade: American business executives tell Clinton that Japan’s markets are still mostly closed and urge him to push for change. Government contracts are cited.

American business executives invited to meet with President Clinton as the Tokyo summit of the world’s wealthiest nations wound down Friday had a familiar complaint: Japan’s markets remain mostly closed and the United States must continue the pressure for change.

However, unlike the auto executives spotlighted during former President George Bush’s ill-fated Japan trip a year and a half ago, the executives breakfasting with Clinton and his trade negotiating team represent companies that have mastered the complex ways of the Japanese market and still find themselves facing barriers.

U.S. Treasury Secretary Lloyd Bentsen opened the session by noting that in industries from supercomputers to communications, the market share of U.S. companies is many times higher in Europe than in Japan. “We can do well in Europe. We can do well everywhere. But not in Japan,” he said.

Such concerns were why U.S. negotiators pushed hard for a deal announced today on a new economic framework aimed at putting their lopsided trade relationship back into balance.

The Americans, many representing leading-edge U.S. technology firms, acknowledged the truth of Japan’s assertions that companies that tailor their products for the Japanese market can do well.

Ernest M. Higa, president of a company that operates the U.S.-based Domino’s Pizza chain in Japan, said he made a hit in Japan by offering pizza with toppings such as squid to match Japanese tastes.

Apple Computers’ representative cited Japanese-language software designed to encourage purchases of Apple personal computers.

But many executives said they still face obstacles even after meeting customer requirements.

Intel Corp., for example, dominates the Japanese market for microprocessors. Yet, Bill Howe, president of Intel Japan, said many companies agreed to look at Intel’s other offerings only after the United States obtained a semiconductor agreement that set a goal for foreign suppliers to achieve 20% of Japan’s semiconductor market.

“What the agreement has done is force a dialogue between buyers and sellers,” Howe said. He said close relationships among Japanese businesses often make it difficult for even the most competitive American companies to break into Japan without government pressure.

Clinton has cited the agreement as a model for the kind of market-share pact he would like to achieve in other sectors in Japan. But in trade talks that took place here parallel to the G-7 summit talks, Japan refused to accept similar numerical targets for other industries, although it did agree in the accord today to achieve measurable results in specific sectors.

But Japan’s Foreign Ministry is a master of managed trade, said Robert Fallon, managing director of Chemical Bank in Japan.

“We call them Darth Vader,” he said, describing how the ministry has zapped profits of U.S. financial firms by raising new barriers in such areas as foreign currency hedging.

“Where we (American firms) have technological leadership and are very profitable, the Finance Ministry has changed the regulations to take our profitability away.”

Many of the executives told Clinton that getting government contracts remains a major problem. Apple’s representative complained of difficulty selling into Japan’s booming education market, despite having quadrupled overall sales in Japan in recent years to achieve an 8% share of the PC market.

Digital Equipment’s Maureen Flanagan noted that American companies have 40% of Japan’s private computer market but less than 6% of its public-sector market.

Even quasi-public agencies maintain clubby ties with their traditional suppliers, the executives said. Teradyne, a U.S. maker of chip testing equipment, spent three years developing a prototype device for testing phone lines at Japan’s telephone giant NTT.

But when it came to developing a final product, Teradyne was told it would have to share its design and product sales with a large group of Japanese companies.