US-Japan construction pact runs into delays. FINGER POINTING
New York — It is more than a month since the United States and Japan announced they had reached an agreement on the politically sensitive issue of allowing US companies to bid on 14 major Japanese government construction projects. Now problems are hindering a final accord on the issue. ``What I see is bureaucrats in Japan dickering and trying to give as little as they can,'' says one government official, who requested anonymity. Japanese officials could not be reached for comment.
Originally, the American negotiators thought they would be able to finish the final document in one to two weeks. But three areas of disagreement have surfaced:
As part of the March agreement, the Japanese said they would provide detailed procedures on how US companies could bid for contracts on the new $8 billion Kansai airport under construction near Osaka. Ambassador Nobuo Matsunaga would provide a cover letter to Commerce Secretary C. William Verity Jr. in the same package as the procedures.
But the US says the Japanese insisted on seeing a cover letter from Washington first.
They then told the US they disagreed with the draft of the letter from Washington. This draft said that if the Japanese violated the agreement, they would be subject to Section 301 of the US trade laws.
This would allow the US to retaliate against Japan for barring US companies.
According to the government official, ``The Japanese want to wiggle out of this provision.'' The Japanese maintain that a separate review procedure has been set up to resolve disputes.
The Japanese have also told the US that the agreement does not allow US firms to bid on new radar units to be installed at the expansion of the Haneda (Tokyo) and Hiroshima airports.
Westinghouse, a US manufacturer, is interested in bidding on these projects. US officials maintain that the Japanese never said anything about radar projects being off limits to US bidding. ``They are trying to take off what was on the table,'' the US official says.
And finally, the Japanese have said that US companies that incorporate in Japan will be treated as domestic companies instead of foreign companies. Domestic companies must show a proven track record in Japan before they can bid on government projects. Since US companies have not been allowed to bid on projects in the past, they have no track record. As part of their March agreement, the Japanese said they would waive the issue for foreign companies with track records abroad.
But the largest US engineering and construction company, Fluor Daniel Inc., is in the process of incorporating a subsidiary in Japan. Japanese officials told the US this would disqualify Fluor from the foreign exemption. ``The Japanese have told us, `you Americans need to invest in Japan.' What better way to show commitment than to set up an office in the country,'' the US official says.
In Irvine, Calif., a Fluor spokesman, Rick Maslin says, ``We view the resolution of this as important for the general construction industry.''
Terry Chamberlain, director of the international construction division of the Associated General Contractors of America, is optimistic that all the differences can be worked out. ``We intend to give it a chance that it will produce some incremental improvement,'' he says. ``It is too early to make a big hullabaloo,'' he adds.
But if the US and Japan do not iron out these differences, it could give President Reagan some trouble on the trade bill, which he plans to veto next week. The Senate passed the bill three votes shy of the two-thirds majority needed for an override.
Sen. Frank Murkowski (R) of Alaska supports the President on the trade bill. But he is also a key player in the issue of US access to Japanese construction projects.
An aide says Senator Murkowski met with US Trade Representative Clayton Yeutter and Treasury Secretary James Baker III last week to ``express his dismay over the Japanese attempt to sidestep the still pending agreement.'' Murkowski told the administration, ``I am distressed at what I am hearing.''