Japan Unlikely to Meet Pledge on Purchases of U.S. Car Parts, Chips

From Reuters

Japan appears unlikely to fulfill its agreements to buy U.S. semiconductors and auto parts, trade officials said Tuesday.

Commerce Secretary Ronald H. Brown said the United States will get tough on Japanese car makers after they warned they might not meet a pledge to boost imports of U.S. auto parts.

Asked if Washington would retaliate, Brown said: "We're going to continue to be tough and aggressive. We think we're making progress."

On Monday, Japanese car makers in Tokyo said they might not meet their pledge to buy $19 billion worth of U.S. auto parts in 1994-95, because of Japan's weak economy.

Deputy U.S. Trade Representative Charlene Barshefsky told a House subcommittee, "With the exception of a communications satellite area, we have not seen significantly increased access to the Japanese government market for foreign goods and services, which the agreement (between the two governments) has anticipated."

The auto sector represents more than 60% of the U.S. deficit with Japan, which is roughly $50 billion a year.

"We are concerned with continuing serious problems in the ability of Americans to sell vehicles in Japan as well as insufficient Japanese purchases of American auto parts," Barshefsky said.

She said that "significant progress is necessary in this (auto) area in order to make a real difference in our bilateral trading relationship."

Testifying before House Foreign Affairs subcommittees on the strained U.S.-Japan trade relations, Barshefsky also expressed pessimism that Japan will live up to a bilateral semiconductor agreement.

Talks on Japanese computer chip purchases are set to take place in Tokyo, when the U.S. side plans to offer specific suggestions on how Tokyo can boost its lagging chip imports.

The U.S. side expects foreign penetration of Japan's chip market to average 20% in 1993.

The foreign market share, which is dominated by U.S. chip makers, topped 20% in the last quarter of 1992 but has since hovered between 19% and 20%.

"We are having difficulty right now seeing how Japan is going to accomplish that" 20% annualized average, Barshefsky said.

She said that in the meetings late this month, the U.S. side will push for greater use by Japan of foreign chips in a range of areas, including autos and telecommunications.

However, Barshefsky said she is optimistic that Japan will not let the Uruguay Round of the General Agreement on Tariffs and Trade talks collapse in order to protect its rice market.

"It's our view that Japan will not let the round fail for the protection of its rice farmers," she said.

Japan last week relaxed its strict rice import policy, announcing a 200,000-ton purchase proposal to make up for a poor harvest.

The Uruguay Round of GATT talks is due to end by Dec. 15, but progress on agricultural liberalization is seen as key to the ambitious multilateral deal.

Tokyo said its rice purchase was a onetime move. Asked if that was an attempt to save face before its powerful farm lobby, Barshefsky said: "We take it at face value right now. But our view is Japan is not likely to let the GATT round collapse."

Assistant Secretary of State Winston Lord, also in House testimony, welcomed the pro-change policies of new Japanese Prime Minister Morihiro Hosokawa, but said it is too soon to tell if this will "stimulate tangible progress on our longstanding economic differences."

"We therefore look to Japan to undertake forward-looking initiatives on the Uruguay Round talks, which must be completed by Dec. 15," Lord said.

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