Japan Trade Deal Averts Sanctions : Tokyo Agrees to Expanded Sales of U.S. Telecommunications Equipment

WASHINGTON â€”  The United States and Japan reached agreement Wednesday on a plan for resolving U.S. complaints about Japanese barriers to imports of American-made telecommunications equipment, heading off a threatened imposition of trade sanctions by Washington next month.

The accord, hammered out early Wednesday after a week of round-the-clock negotiations, will enable Motorola Inc. to expand its sales of cellular telephones to the profitable Tokyo and Nagoya markets. Motorola has been confined to western Japan.

The Japanese agreed also to enable buyers of foreign-made cellular telephones to use them anywhere they travel in Japan. Tokyo will also speed up its procedures for issuing licenses for foreign-made two-way car-radio systems.

The accord was worked out by Carla Anderson Hills, the U.S. trade representative, and Ichiro Ozawa, a member of the Japanese parliament who was serving as a special representative of Japan’s new prime minister, Sosuke Uno.

If the two sides had not been able to reach agreement by July 15, the Bush Administration would have been forced to retaliate against Japan by imposing punitive 100% tariffs on some Japanese exports to the United States.

The case was the first of its kind to be filed under a new provision of the 1988 Omnibus Trade Act, which mandates the imposition of U.S. sanctions whenever Washington finds that another country is not living up to an agreement involving trade in telecommunications.

Hills said in a statement that, as a result of the new accord, “it is no longer necessary for the U.S. government to consider retaliation against Japanese exports� over the telecommunications issue. She described it later as “a very strong agreement.�

Washington still has threats of sanctions pending against Japan over U.S. charges of unfair trading practices involving three other items--purchases of American-made supercomputers, satellites and finished plywood. The two sides are still discussing those issues.

In Wednesday’s case, the United States had charged Japan with failing to carry out a 1986 agreement in which Tokyo had promised to open its cellular telephone and mobile car-radio markets to foreign manufacturers. Before that agreement, the Japanese market had been completely closed.

Motorola, based in Schaumburg, Ill., had complained that--although Japan allowed U.S. manufacturers to market telecommunications products there--it had refused to allocate enough cells and frequencies to enable the company to operate in the Tokyo and Nagoya areas.

The company contended also that it was being subjected to undue delays by Japan’s Ministry of Posts and Telecommunications in processing applications for radio licenses. Japanese manufacturers face no such restrictions in marketing their products in the United States.

Partly because of the bad experience that the United States had in the wake of the 1986 accord, Wednesday’s agreement was unusually detailed, including a nine-page, single-spaced attachment designed to spell out specifics of the steps that Japan has promised to take.

In essence, the Japanese agreed to allocate additional channels and bands for use by American-made cellular telephones, which use technology different from that of the Japanese, including two megahertz of additional spectrum in the Tokyo and Nagoya areas and an additional three megahertz nationwide.

To Grant Preferred Status

The Japanese agreed also to set up a kind of affirmative-action program that would give foreign manufacturers preferred status in the assignment of new frequencies for the two-way radio systems, such as that used to dispatch taxis, to ensure that they are not locked out of the market.

Additionally, they pledged to make their licensing system more open and free of delays.

Motorola’s reaction was favorable, but measured. Albert Brashear, a company spokesman, said: “We hope the accord will prove to be a significant step in opening up the Japanese market.� However, he added that “the proof will be in the actual performance.�

Motorola had estimated earlier that the restrictions Japan had imposed were depriving the company of $2 billion in added sales over a five-year period, a figure that government officials quoted widely to justify the U.S. threat of possible sanctions.

However, Brashear was more conservative Wednesday, saying that the company would have to redesign its base units and other equipment to take advantage of the new frequencies that the Japanese are offering, which are spread too far apart for existing equipment.

It was not clear which Japanese products the Administration would have slapped punitive tariffs on if the accord had not been reached. Hills published a list of 54 candidates, ranging from high-tech computers to cosmetics, but never decided which to choose.

The prospect of U.S. sanctions was not hailed universally. At a public hearing in May, dozens of U.S. firms that depend on Japanese imports to use in their own manufacturing operations protested that imposition of U.S. sanctions would hurt them as well.

The week’s negotiations were hampered by political factors. Japan’s government fell after a stock-purchase scandal there. And the Ministry of Posts and Telecommunications, which controls the allocation of frequencies in Japan, has no experience--or interest--in international issues.

As a result, the negotiations were slow and tortuous and almost broke down at several points. Ozawa was ready to go home to Tokyo Tuesday without an agreement when Nobuo Matsunaga, the Japanese ambassador here, persuaded him to stay. The pact was reached 24 hours later.

CRISIS IN JAPAN--Allegations of misbehavior threaten Prime Minister Sosuke Uno’s political survival. Page 6