Trade Showdown Little Progress Made In U.S.-Japanese Talks
With the Clinton administration broadly hinting of stiff trade sanctions, U.S. and Japanese negotiators failed in initial efforts Wednesday to achieve a breakthrough in long-stalemated auto talks.
The biggest sticking point is a U.S. demand that Japan’s automakers continue “voluntary” purchase targets for American-made parts, agreements first reached in 1992 during the Bush administration.
The U.S. side also is demanding that the Japanese expand the number of auto dealerships stocking U.S. cars and relax inspection regulations seen as impediments to the sale of U.S.made replacement parts to Japanese repair shops.
“Opening Japanese markets for autos and auto parts as well as increased purchases by transplants in the United States of competitive parts is a serious issue,” Kantor said at the start of Wednesday’s negotiations. “The United States is focused on a meaningful solution in all three areas of concern.”
While little progress was reported Wednesday in the talks with Japanese Trade Minister Ryutaro Hashimoto, Kantor did indicate that the two sides would continue meeting through Friday on the edges of a broader trade meeting that includes trade ministers from Canada and the 15-nation Europe Union.
Hashimoto, as well, indicated little initial progress. Asked during a break how things were going, he noted Vancouver’s gloomy, overcast skies and said, “It is still like today’s weather.”
The U.S. side views this week as the climatic showdown for its arduous 20-month effort to expand sales opportunities for U.S. companies as a way of reducing America’s record $66 billion trade deficit with Japan. Autos and auto parts make up nearly 60 percent of that deficit.
In Washington, Laura D’Andrea Tyson, head of the president’s National Economic Council, scheduled a weekend meeting of the NEC to consider what she called a “long list of options” of what the United States might do if there is no agreement.
She apparently was referring to a list being prepared of more than $1 billion in Japanese imports that could be hit with punitive tariffs of 100 percent if no agreement is achieved, the largest such trade sanction case in U.S. history.
Administration officials, who spoke on condition of anonymity, said that the NEC could authorize publication of that list next week with the sanctions scheduled to take effect in 30 days.
While that is normally a period used for last-minute talks aimed at averting a trade war, the Japanese have said repeatedly that they do not intend to negotiate under the threat of sanctions and instead would break off talks and bring a case against the United States before the new World Trade Organization.
Neither negotiating team indicated any movement on the key issue of the voluntary sales plans although the Japanese side insisted that if that U.S. demand was dropped, deals could be reached in the other two areas.
Hashimoto, upon arriving in Vancouver, repeated the Japanese position that it would be “impossible” to get a deal unless the United States dropped its demands for voluntary purchase agreements.
The Japanese view the agreements as the equivalent of setting numerical targets that must be met by Japanese companies regardless of market conditions. Already, Japanese auto companies complain that their export opportunities are being severely squeezed by the sharp drop in the value of the dollar.
Absent any meaningful agreements to narrow the trade deficit, many currency traders believe that the only way the United States will be able to solve its trade problems is to see the dollar slide even further, making U.S. goods cheaper on overseas markets.