US, Japan Dispute Over Auto Parts Goes Bumper to Bumper

By , Staff writer of The Christian Science Monitor

IF attitudes voiced yesterday by US and Japanese officials in Tokyo are any guide, the two countries are indeed heading for one of their most bitter trade confrontations yet.

Negotiators from the two countries met last week to work out measures to make it easier for foreign companies to sell automobiles to the Japanese and auto parts to Japanese carmakers, but the talks ended in failure.

The US and Japan have had a troubled and sometimes-acrimonious trade relationship since the early 1970s, when the United States realized that Japan was selling vastly more products to US consumers than vice versa. Previous negotiations have included difficult junctures, but this time the US is considering the imposition of tariffs worth billions of dollars, and the Japanese are promising to drag the US before the World Trade Organization for arbitration.

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President Clinton is expected to announce how the US will react to the breakdown in the negotiations this week. There are reports that the Americans may institute nontariff trade barriers, such as limits on the expansion of Japanese car dealerships in the US, suggesting that Washington may be striking a Japanese approach in its dealings with Tokyo.

Nonetheless, says a US official here who spoke on condition of anonymity, American diplomats are anything but panicked. ''I would say the mood inside the embassy is 'Thank goodness we've finally gotten to the point of saying ... We're getting nowhere and now there is a cost that will be imposed on Japan.' ''

US frustrations

The official's comments indicate frustrations that have resulted from US efforts to open markets here. Japan had a $130 billion trade surplus with the rest of the world last year. Its surplus with the US was $66 billion, of which 60 percent was in the automobile and auto-parts industries.

With rare exceptions, bilateral trade deals have been characterized by vague Japanese promises to deregulate parts of their economy or otherwise make it easier for foreign companies to do business here. The Clinton administration came into office vowing to negotiate more concrete deals that would boost the US economy by expanding exports to Japan. The Japanese vigorously criticized US negotiators for attempting to ''manage'' trade, accusing the US of demanding quotas of improved foreign sales in Japan.

Over the past year, the US has appeared to backtrack from its get-tough approach, settling in some agreements for ''significant increases'' in foreign access to Japan's markets.

US urges 'voluntary plan'

But in this round of talks, the US is insisting that Japanese carmakers renew a ''voluntary plan'' to forecast their purchases of US-made auto-parts. The US views the plan, initiated under President Bush in 1992, as an effective device, since Japanese automakers fulfilled their goals and last year purchased some $20 billion worth of US-made parts.

The Japanese see it as a mistake they will not repeat. Officials in Tokyo are sounding uncharacteristically hard-nosed: ''We are very unanimous,'' says a Japanese trade official who declined to be identified further. ''The request by the US [for a] voluntary plan will never be acceptable to us. We don't want a confrontation with the US, of course, but at the same time we can never accept this approach, which is a strong intervention into private industry by government.''

The repudiation of government ''intervention'' in the economy by a Japanese bureaucrat might ring a little false to longtime observers of Japan. Tokyo's economic bureaucracies are now encouraging other Asian governments to mimic their tight control of industry and official guidance of development.

The two sides are also discussing changes that would make it easier for foreign producers to gain access to car dealerships in Japan and to sell replacement parts, such as new mufflers or alternators. Japanese negotiators have said agreement might have been possible on those fronts had the US not insisted that a voluntary plan accompany the deal.

Yesterday, the top executives of Japan's leading automakers supported their government's position, saying the US was in no position to make demands of foreign companies.

But it is clear that three years ago the carmakers had a different view of governmental intervention. A Toyota Motor Co. spokesman says of the earlier decision to go along with the plan, ''The government thought it wise to comply with US demands in 1992.''

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