U.S., Japan Reach Pact on Cargo Routes

The United States and Japan averted a trade war Thursday night by agreeing to open up new cargo routes for both nations and renegotiate a 43-year-old aviation treaty that promises to dramatically reshape the competition for lucrative transpacific routes.

The accord could signal improved U.S.-Japan trade relations, following by only three weeks the settlement of a very bitter and contentious dispute over U.S. access to the Japanese auto market. The United States had threatened to curtail Japanese cargo shipments to the United States--possibly as early as later this month--if an aviation agreement was not reached.

While final details of the agreement are to be discussed today, U.S. Transportation Secretary Federico Pena expressed confidence Thursday night that the sanctions threat will be lifted as a result of the agreement. The accord includes the Japanese government’s approval of seven new routes for Memphis, Tenn.-based Federal Express from airports in Tokyo and Osaka to other parts of Asia. Japan’s refusal to approve those routes triggered the aviation dispute.

But in return, Pena and Japanese Transport Minister Shizuka Kamei--who held their talks in Downtown Los Angeles--agreed to begin renegotiating in September the cargo portion of the 1952 bilateral aviation treaty that Japan has bitterly denounced as unfair to Japanese carriers. That agreement was signed at a time when U.S. carriers dominated the Pacific and Japan did not have a national airline. The United States also agreed to approve an additional route from Japan to Chicago.

The two ministers are scheduled to meet again this morning in Los Angeles to finalize details on the renegotiation of the cargo treaty and the additional air route.

Pena said Thursday night that the two governments had not agreed to renegotiate the passenger portion of the 1952 agreement. But Thursday’s pact marks the first major revision of the bilateral treaty that governs all air traffic across the Pacific Ocean and affects an air cargo market valued at $1 billion annually.

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At the conclusion of the talks that lasted for more than three hours, Pena said an atmosphere of “mutual respect” had allowed the two governments to conclude an agreement that would open up new opportunities for U.S. and Japanese air carriers by “achieving an equality of opportunity” and improving the bilateral relationship.

Later, a U.S. transportation official said the U.S. government wants to move toward an “open skies” policy that would free up air routes that are currently highly regulated.

Kamei, whose government faces a difficult upper house election this weekend, said it was “gratifying” to see that the United States and Japan could work together to produce an agreement that would ensure that “air services are balanced on an expanded scale.”

Under procedures established by the 1952 agreement, Federal Express and Northwest Airlines are authorized to carry cargo between the United States and Japan and points beyond. Japan Air Lines and Nippon Express Cargo are allowed to carry cargo to a few airports in the United States and do not have similar “beyond” rights.

While Federal Express will gain new routes under Thursday’s accord, it will also face potential new competition from U.S. and Japanese carriers if the 1952 treaty is revised. Federal Express spokesman Tom Martin said, “We’ve never opposed further revisions of the treaty. We’re only in favor of doing that once our rights under the treaty were honored.”

Federal Express recently built a new transshipment facility at Subic Bay in the Philippines to allow it to create an overnight express mail service throughout Asia. The routes through Japan were a critical part of that network.

Japan Air Lines spokesman Geoffrey Tudor in Tokyo applauded the news that the postwar aviation agreement was being dismantled.

“The old agreement gives the U.S. too much,” Tudor said.

Times staff writer David Holley in Tokyo contributed to this story.