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U.S., Japan Resume Automobile Trade Talks But Pact Will Be Difficult To Conclude

Tue., May 2, 1995

The United States and Japan Monday resume talks on automotive trade, but Japanese officials doubt an agreement can be concluded by the end of the week because of U.S. insistence that Japanese procurement plans for U.S.-made auto parts be part of the deal.

“A final accord is basically impossible this week,” a Japanese trade official told Knight-Ridder Financial News.

“An agreement in principle would be the maximum success for us, but even that will be very difficult,” said the official, who will take part in working-level talks. The auto talks are the last but most significant sector to be negotiated under the U.S.-Japan “framework” process launched in July 1993. Of the $66 billion U.S. trade deficit with Japan last year, $36.7 billion or 56 percent of the red ink was in automotive trade.

Marathon negotiations last September failed to produce an auto accord, although the two sides were able to hammer out market-access pacts covering insurance and public procurement of telecommunications and medical equipment.

An agreement in principle to open Japan’s flat glass market to foreign suppliers also was reached, yielding a full accord in December.

That type of agreement apparently is the most the United States and Japan can hope for now. “It all depends on whether the U.S. drops its demands for voluntary plans,” the Japanese trade official said.

“The decisive battle in the negotiations will be the ministerial talks,” he said, referring to the meeting here Wednesday between U.S. Trade Representative Mickey Kantor and Japanese Trade Minister Ryutaro Hashimoto. “But there is no room for Japan to be flexible on auto-parts purchasing plans because they are business, not government, decisions.”

Japanese automakers have been as adamant as the government in their refusal to heed U.S. calls for renewing such plans.

The Clinton administration has counted such plans, along with expanded access to Japanese car dealerships and deregulation of Japan’s market for replacement vehicle parts, as key to an accord.

Earlier Monday, U.S. Commerce Secretary Ron Brown said Clinton administration officials “hope we could make very significant progress” in this week’s auto talks.

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