Clinton Warns Japan Must Slow Steel Exports to Pre-Crisis Levels

WASHINGTON — President Clinton on Monday applauded new Japanese efforts to open its economy to foreign competition and slash red tape that strangles competition.

But Clinton, in a joint news conference with Japanese Prime Minister Keizo Obuchi, warned that the Asian nation must restrain its steel exports to the United States or face U.S. retaliation.

“We will take action if steel imports do not return to their pre-crisis levels on a consistent basis,” Clinton said. “Playing by the rules of trade is the best way to sustain a consensus for open trade. . . . It will help Japan adapt to the challenges of the new global economy.”

For his part, Obuchi said he would closely monitor Japan’s economic performance in the next couple of months for “tangible” signs of a recovery. “I believe we have adequate policy measures in place,” he said in defense of his economic plan, adding, “I believe we now see the financial system moving ahead toward regaining international confidence.”

The two nations released details of new Japanese efforts to deregulate its economy and open it up to foreign competition. Japan agreed to ease restrictions to foreign participation in telecommunications, building materials, medical devices, pharmaceuticals, financial services, energy and retailing. In a separate statement, Japan said that increasing foreign investment would further strengthen the economy.

But the moves did not eliminate U.S. questions about whether Japan was genuinely opening the curtain on its traditionally protected economy. Clinton pointedly noted ongoing trade controversies involving Japanese protection of insurance, automobiles and glass, along with access to the potentially lucrative market of Japanese government procurement.

“Too often our industries have found that while they might be able to set up shop, the restrictions of an over-regulated market in Japan made it impossible for them to sell on competitive terms,” said U.S. Trade Representative Charlene Barshefsky, adding that U.S. officials would “closely monitor” Japanese implementation of the agreements.

Japan on Monday said it would give companies greater flexibility in establishing telecommunications networks and would also allow foreign ownership of cable television enterprises. Revised standards in multifamily home construction would provide new opportunities for U.S. suppliers of building materials in Japan, according to U.S. trade officials.

Japan further said it would modernize certain requirements that have acted as barriers to foreign firms, such as a now-defunct standard that nails used in nail guns were classified as military weapons.

U.S. manufacturers expressed guarded optimism about the measures, which were meant to further previously announced deregulation plans.

“These agreements are most welcomed, but implementation is the key to real progress and success for U.S. companies in Japan,” said Edward M. Rozynski, executive vice president of the Health Industry Manufacturers Assn.

Complimenting Obuchi for being “very aggressive” on the economy, Clinton urged Japan to continue its efforts at recovery. And in a sentiment of interest to Asia watchers, Clinton said he hoped the United States, Japan and China would cooperate in the next century based on commonly held, democratic values.

The two leaders spoke with reporters on the final day of Obuchi’s six-day trip to the United States, the first such visit from a Japanese prime minister in 12 years. Obuchi, initially viewed as a dull technocrat, has gained popularity in Japan during his nine months in office, despite Japan’s economic straits. He also has stoutly insisted that his moves to stir Japan’s stagnant economy are of substance, rather than symbolic gestures to appease foreign critics.

On Monday, Obuchi spoke at length about Japan’s neighbor North Korea, which has launched a missile over Japanese territory and holds “suspicious” nuclear facilities. In dealing with the hostile neighbor, Obuchi said, it was necessary for Japan to cooperate with the United States in a strategy of “dialogue and deterrence.”

Japan remains concerned about several possible abductions of Japanese citizens by North Korea, Obuchi made clear, and Clinton responded with sympathy. “I don’t believe that Japan should abandon this issue until it is resolved,” Clinton said, drawing a parallel to U.S. prisoners from the war missing in Vietnam.

Earlier Monday, Clinton and Obuchi were treated to a lesson in bonsai, the Japanese craft of growing miniature trees. Clinton presented Obuchi with a 300-year old bonsai as a gift.