TRADE : Administration Works to Keep Shine on Japan Car Pact

One week after the United States and Japan stepped back from the brink of a trade war, the agreement they reached to open Japan’s automotive market to foreign companies appears to have lost some of its glow, and the Clinton Administration is quietly trying to head off sharp criticism.

House Speaker Newt Gingrich (R-Ga.), initially quiet on the subject of the trade pact, has lashed out at the Administration’s tactics, if not its goal. His criticism prompted senior White House officials, in their morning staff meetings Thursday, to note the potential political ramifications if a negative view of the agreement begins to take hold.

“The first wave [of reaction to the agreement] seemed to be a little more positive,” one White House official said.

U.S. Trade Representative Mickey Kantor, who negotiated the pact, said in an interview with The Times that Gingrich’s criticism was motivated by political considerations, and he challenged the Speaker to a debate.

“What the Speaker is saying is he likes the status quo. . . . He’s saying, ‘Everything is fine, don’t raise your voice,’ ” Kantor said. “We’ve tried that for 35 years.”

Gingrich, in a speech on Wednesday, said that the Administration has been too public in pressuring Japan. “I mean, it is an absolutely insane long-range strategy to get in public fight after public fight with the Japanese,” he said.

Senate Majority Leader Bob Dole (R-Kan.) has also criticized the agreement, describing it as “vague, unenforceable, non-binding--in short, it is virtually empty.”

A well-placed Republican who pays close attention to the political impact of trade issues said that, while the “public castigation” of Japan could become counterproductive, “the Administration needed to turn up the volume for domestic, political reasons, to show they are macho-tough.”

Asked what was driving Gingrich’s criticism, Kantor said: “I think it’s politics.”

“Giving the President credit for this would not be in their [the Republicans’] political interest,” said the trade representative, who is himself particularly attuned to political considerations and who was chairman of Clinton’s 1992 presidential campaign.

Among the key difficulties facing the Administration in selling the pact to the public is an element that made it so troublesome to complete: It provides for no enforcement mechanism if Japan and its auto industry do not adhere to the pact’s “voluntary” provisions to open up their markets.

In the agreement, completed June 28 in Geneva, Japan said that it would relax its regulation of auto repair shops, a measure intended to bring greater use of foreign-made parts, and business groups agreed to take voluntary steps intended to make it easier for American automobile and parts companies to reach Japanese consumers.

The agreement includes no commitments to specific sales figures or market shares and relies instead on Japan’s agreement to aim for sales levels that the Japanese auto industry hopes to hit. The pact was reached only hours before the United States intended to put into effect tariffs of 100% on $5.9 billion worth of imported Japanese luxury automobiles, a move that likely would have prompted Japanese retaliation.

Meanwhile, the American Automobile Manufacturers Assn., which had been aggressively cheering on the Administration’s threat to impose the sanctions on luxury models and which stood by approvingly in Geneva when Kantor completed the negotiations, said it now must wait to see whether the agreement will do what its supporters claim: make it easier for American automobile companies and parts manufacturers to tap the potentially lucrative Japanese market.

“It’s a very important step and it’s got the potential to be a very good agreement. But we’ve got to begin now to start tracking what we are able to accomplish and what barriers we find,” said Laura Armstrong, a spokeswoman for the association. “The proof is always in the pudding, and that hasn’t come in yet.”

Meanwhile, a Japanese automobile industry association reported Thursday that auto imports in Japan climbed 35% during the first half of the year, at the same time the agreement was being negotiated. But that figure reflects growth from a very small base.

Out of a market of 2.6 million vehicles, 185,637 were imported, up from 137,966 during the first half of 1994, according to the Japan Automobile Importers Assn. The largest number of imports were of cars made in Japanese-owned factories overseas. Honda USA sent more vehicles to Japan than the combined total sent by General Motors Corp., Ford Motor Co. and Chrysler Corp.