Newspaper article The Christian Science Monitor

Tough Trade Dispute, US Recession Put Japan on Spot

Newspaper article The Christian Science Monitor

Tough Trade Dispute, US Recession Put Japan on Spot

Article excerpt

THE task of prying open Japan's markets for foreign business - from rice to lawyers - entered a new political stage last week.

In their first major trade talks in 1991, Japanese and United States negotiators argued in Tokyo over critical details of their latest economic disputes with little success. But it was Japan's passive role in both the Gulf war and the failed Uruguay Round of the General Agreement on Tariffs and Trade (GATT) that set the tone for the talks, and the start of a busy year in bilateral conflicts.

In addition, Japan may be put on the spot this year by the effects of a US recession, the slow progress in reducing the US-Japan trade imbalance, and plans by the Bush administration to toughen US trade policy.

On top of that, there are fears that American public opinion might shift against Japan this fall as the 50th anniversary of the attack on Pearl Harbor is observed.

"1991 will be a difficult year for trade matters (with Japan)," says Deputy US Trade Representative Linn Williams.

Last week's talks focused on US complaints over Japan's slowness in complying with an agreement made last June to restructure its economy along American lines, or what US trade officials call "integrating our two economies."

The agreement, which is the centerpiece of US-Japan ties at the moment, is known as the Structural Impediments Initiative (SII). Largely lopsided against Japan, it calls for both countries to alter their business and government practices in a number of areas.

THE US side was not satisfied with Japan's efforts to remove barriers against foreign investment, such as price-fixing cartels, secret government "guidance to industry," and exclusionary ties between companies.

The sharpest dispute was over Japan's suggested increase in the fine charged against companies that illegally fix prices. The US wants a surcharge of over 10 percent of illegal sales, but Japan opted only to triple its present rate to 6 percent. That level of punishment is roughly enough to get back illegal gains from cartels, says Kenichiro Sasae, a Foreign Ministry official.

Unhappy with that rate, US Assistant Attorney General and antitrust enforcer James Rill warns that Japan's efforts against monopolies leave it "far short of the other major economic nations in the world." He adds that "the clock is running" on Japan's dealing with the issue.

Mr. Rill says he will seriously take up a Justice Department study on whether US anti-monopoly laws should be applied to the worldwide practices of foreign companies that also operate in the US. …

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