U.S., Japan Defuse Trade Fight; Ports Stay Open
Averting an unprecedented shipping ban that would have thrown transpacific trade into turmoil, top U.S. and Japanese negotiators reached a tentative accord late Friday designed to give U.S. and other foreign shippers greater access to Japanese ports.
The agreement in principle was finalized hours before the Federal Maritime Commission was to block Japanese container ships from entering U.S. ports and impound those already here, a move that would have disrupted billions of dollars in waterborne trade and severely undermined relations between the two giant trading nations.
U.S. and Japanese officials and representatives of Japan’s shipping industry were expected to hammer out the details of the agreement in Washington over the weekend.
On word of the accord, the U.S. maritime panel voted to delay imposing the sanctions on Japanese shippers until Monday, when it will assess negotiators’ progress toward a final deal. Unless those talks fail, the sanctions would be lifted.
“We’re hopeful that events over the weekend will enable the commission not to proceed with its planned actions,” said Thomas Panebianco, a commission attorney.
Japanese Ambassador to the U.S. Kunihiko Saito told reporters at a joint news conference with Undersecretary of State Stuart E. Eizenstat that there were “still a few details to be worked out.” Both men characterized the remaining issues as minor.
Eizenstat told reporters late Friday that the two sides had negotiated a “very concrete agreement that sets very clear parameters and which would open up the port services of Japan in a very meaningful way.”
The crisis was precipitated by U.S. demands for the removal of cumbersome and costly rules that significantly raise the costs of shipping goods to Japan, including a system of “prior consultation” in which shippers must notify Japanese officials before making changes to routes, pricing or other plans.
The failure of talks earlier this year prompted the maritime commission in September to impose $100,000 fines on each Japanese vessel arriving in U.S. ports. When Japanese shipping companies refused Wednesday to pay $4 million in accumulated fines, the commission ordered the shipping ban, which was scheduled to go into effect at midnight Friday. It would have been the first such order under a 1920 U.S. maritime law.
President Clinton hailed the preliminary agreement as good news for American companies.
“We have long pressed Japan for a firm commitment to liberalize trade in its ports, and today they have done just that,” Clinton said in a statement issued from Argentina, the last stop on his South American tour.
Shippers welcomed the news that the tense standoff was producing an agreement that would reduce the costs of doing business in Japan, their most lucrative but costliest market in Asia.
“Any substantive breakthrough in the current monopolistic and anti-competitive environment of Japan’s ports would be welcomed,” said Gil Roeder, marketing director for APL Ltd., operator of American President Lines, which has shipped cargo to Japan since 1867.
Japanese shipping firms, including the three facing financial penalties in the dispute, also stand to benefit handsomely from any port reforms in Japan. The three companies are Mitsui OSK Lines Ltd; Kawasaki Kisen Kaisha, known as K-Lines Ltd.; and Nippon Yusen Kaisha, known as NYK Lines Ltd.
“Japanese shipowners, American shipowners, Taiwanese shipowners, they’ll all be elated,” said Jay Winter, executive secretary of the Steamship Assn. of Southern California, which represents 55 shipowners and pier operators.
The Japan Foreign Steamship Assn., which represents foreign shippers operating in Japan, estimates that it costs a container ship $36,750 to call at Yokohama compared with $12,350 at the Port of Long Beach and only $5,463 in Hong Kong.
The primary target of the U.S. pressure is the Japan Harbor Transportation Assn., which has historically controlled all port services and labor on the waterfront. The United States wants the Japanese Ministry of Transport to help police the JHTA and other marine operations.
According to a letter faxed to the Federal Maritime Commission from a top official of the U.S. Department of Transportation, which conducted the negotiations on the American side, the preliminary agreement includes a commitment from top levels of the Japanese government to implement the following:
* A streamlined and reformed “prior consultation” system for shippers to notify Japanese harbor officials of changes in operation.
* A framework for establishing an alternative system that would enable foreign shippers to bypass the JHTA.
* A streamlined licensing system for foreign companies seeking to establish new terminal operations.
Steve Clemons, a vice president at the Washington-based Economic Strategy Institute, said the reforms, if successfully implemented, could focus a spotlight on corruption and influence-peddling in the maritime industry in Japan.
He said the provision most likely to face stiff resistance is the one allowing U.S. and other foreign shippers to establish their own terminal operations, which would threaten a lucrative monopoly enjoyed by a handful of powerful Japanese companies.
“You are going to see some angry people” in Japan, he said.
Despite the preliminary accord, the Japanese shipping companies are still expected to pay the U.S. fines even if the dispute is resolved, according to Panebianco.
“Those are debts to the U.S. government,” he said.
As negotiations headed down to the wire Friday, shipping companies and their clients had begun scrambling to make alternative arrangements to get their cargoes moved. Although the three Japanese shipping lines only make up about 18% of the transpacific container-vessel market, some large companies depend almost exclusively on their operations.
The ban would have occurred at a critical time because American retailers were gearing up for the holiday sales season. Others that would have been affected are auto and computer manufacturers dependent on parts from Japan and U.S. agriculture exporters shipping grains and meat the other direction.
Times wire services contributed to this story.
