United States, Japan Resolve Shipping Dispute

The United States and Japan defused a tense trade dispute Friday that had threatened to block Japanese ships from U.S. ports and disrupt billions of dollars in shipping between the world’s two largest economies.

Officials from both countries announced they had reached an agreement in principal to give American shippers the same access to Japan’s ports that the Japanese enjoy in the United States.

U.S. shippers have complained for years about burdensome Japanese port rules that drive up costs.

President Clinton hailed the accord 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.

Undersecretary of State Stuart Eizenstat, who stepped in to lead the U.S. negotiating team on Friday, characterized the deal as a “breakthrough which we hope will lead to meaningful reform of these restrictive, costly and prohibitive port practices.”

The trade dispute intensified dramatically this week when the Federal Maritime Commission voted to bar container cargo ships from Japan’s three major shipping lines from entering U.S. ports.

The ban was scheduled to take effect at midnight Friday, but Eizenstat said he expected the commission, an independent regulatory body, to drop its order in light of the progress achieved in the negotiations.

A ban on Japanese container ships would have affected billions of dollars worth of products just as American retailers were trying to get ready for the holiday sales season.

American goods, including farm products that are carried on the Japanese ships on their return trips, also would have been affected.

There was no immediate word from the four-member commission, which had triggered the showdown by suddenly voting on Thursday to bar the Japanese ships.

Steve Clemons, a trade expert with the Economic Strategy Institute in Washington, said commission chairman Howard Creel and the other officials apparently wanted to be sure that what the administration had achieved would actually alleviate problems for American shippers.

“The Maritime Commission is showing it is very serious,” he said.

He added that it was highly unlikely, given the support the agreement has within the administration, that the commission would carry through with its order.

Japanese Ambassador Kunihiko Saito told reporters at a joint news conference with Eizenstat that there were “still a few details to be worked out.”

Both men characterized the remaining issues as minor.

Lower-level negotiators were directed to work out the fine print, a process that the U.S. side estimated might take the weekend to wrap up.

Eizenstat said he believed the tentative deal could lead to “meaningful reform” in Japanese port practices, which U.S. shippers have long complained discriminate against them.

Under the agreement, the Japanese agreed to create an alternative system for U.S. and other foreign carriers to negotiate for stevedores to unload their ships.

This had been a key demand of U.S. shippers, who wanted the Japanese government to rein in the Japan Harbor Transportation Association, an association of stevedoring companies that American shippers complained greatly limited access to Japanese ports and drove up costs for unloading products.

In addition to dispatching Eizenstat to lead the U.S. negotiating team, the White House kept close tabs on the discussions, convening a meeting of the president’s National Economic Council at the White House to review the proposals that were on the table.

The three shipping lines - Mitsui O.S.K. Lines, Ltd., Kawasaki Kisen Kaisha Ltd., and Nippon Yusen K.K. - typically carry containers of boxes that can be loaded onto railroad cars.

The vast majority of products that move between the two countries are transported in container ships.

While autos are transported separately in specialized ships, the huge two-way trade in auto parts goes by container ships.

The commission, a small independent regulatory body that oversees U.S. ports, voted to deny entry to the three Japanese shipping lines after those companies failed to pay an estimated $4 million in fines that came due at midnight Wednesday.

Those fines - amounting to $100,000 per ship entering a U.S. port - were imposed starting in September after the U.S. claimed the Japanese government failed to live up to earlier commitments to liberalize port practices.