Japan airport spawns friction with US. At issue: US wants American firms to have role in project

``Kansai'' is the latest cause c'el`ebre in the long history of United States-Japan trade friction. Kansai is the Kansai International Airport project, to be built three miles off shore in Osaka Bay. It could cost up to $8 billion, and the US Department of Commerce wants to make sure that American companies get at least some piece of the action. Last year, Commerce Department officials estimate, Japanese construction companies participated in about $1.7 billion worth of construction in the US. American companies did no building to speak of in Japan.

As the perception of this inequality sinks in among US Congressmen and throughout the halls of government, the determination to pry open the door of Japan's construction business gains ground. Overall, the US was $55 billion in the red in its trade with Japan last year, and this year the figure may swell to $70 billion to $80 billion.

Construction in Japan is a cozy cartel, bids being decided by dango, informal talks that are outlawed but pervasive. US officials know it will be tough to get American companies accepted within the Japanese system.

But the potential rewards are great. Between now and the end of the century, six major public works projects are scheduled to be completed (including Kansai), with a total value of nearly $50 billion. If Japanese companies knew of similar plans in any other country, they would be on the scene in force, bidding eagerly for part or all of the action. Even now, Japanese companies are building the second Bosporus Bridge in Turkey and hydroelectric projects in the US.

Persistent pressure from US officials has gradually brought about a change in the attitude of the Kansai Airport project authorities -- from one of saying that foreign firms had no role to play, to one of promising to open up later stages of the bidding to non-Japanese firms. European and South Korean companies are also interested in the project.

Late this month or early next month, Undersecretary of Commerce Bruce Smart is expected to lead a high-powered delegation of businessmen to Osaka to attend a seminar organized by the Japanese and American governments and intended to explain how the Japanese system of procurement works and what opportunities there will be for Americans.

Some companies are discounting the seminar's potential results already, saying they are just window dressing. But US government officials point to the example of a seminar organized a couple of years ago by NTT -- Japan's giant telephone and telegraph monopoly -- under somewhat similar circumstances.

At first, the then-president of NTT conceded that perhaps he might buy ``mops and buckets'' in the US. Under his successor, though, NTT is indeed buying non-Japanese equipment, a recent example being a $250 million order that went to a Canadian company with factories in the US.

One noticeable aspect of the Kansai project is that the US Department of Commerce is playing an active role, perhaps somewhat comparable to that of Japan's celebrated Ministry of International Trade and Industry. (MITI officials often refer to themselves with a mixture of wry pride and deprecation as the ``notorious MITI.'')

Hitherto, US companies -- with some exceptions -- have not been noticeably eager to involve themselves in the Kansai project, fearing from past experience that they may have very little to show for a huge investment in time, effort, and money.

But if the Department of Commerce is willing to act as a kind of vanguard for American companies and shoulder the task of negotiating some sort of procurement agreement with the Kansai Airport authorities, then certainly these companies would not be reluctant to profit from the resulting opportunities, analysts say.

Such cooperation between government and private business has been rare in the US, but it has been an important ingredient in the success of what others have labeled ``Japan Inc.''

US government officials also point to another potential opportunity for American firms -- Japan's increasing foreign economic aid budget. Japan's Overseas Economic Cooperation Fund has about $3 billion to spend a year in foreign aid, of which 20 percent, $600 million, is untied. That is, $600 million worth may be spent by the recipient country to buy goods and services anywhere it likes, not just in Japan.

Will this all end as nothing more than a hopeful gleam in some enthusiastic officials' eyes, leaving nothing but a trail of recriminations? At this point no one can say for sure. But one way or another, Kansai will be the test.

You've read  of  free articles. Subscribe to continue.
QR Code to Japan airport spawns friction with US. At issue: US wants American firms to have role in project
Read this article in
QR Code to Subscription page
Start your subscription today