U.S. delays sanctions against Japan Eased restrictions on trade spur move


WASHINGTON -- The Clinton administration deferred trade sanctions against Japan yesterday after Tokyo agreed to open its public sector construction market to international competition.

U.S. Trade Representative Mickey Kantor announced yesterday morning that the administration would not proceed with the sanctions, planned for Monday, because the Japanese government had promised to eliminate the practice of restricting the bidding on construction contracts to a few companies. The sanctions would have barred Japanese companies from bidding on some U.S. government construction projects.

The century-old restrictions have long been a sore point with U.S. construction companies. Irritation over them has intensified in the past decade, as Japan has embarked on an extensive program to build better roads, airports and other public works.

Ending the restrictions would eliminate a persistent source of friction between the two countries.

"This move today by the Japanese government is welcome. It is important, it is significant, and it's historic," Mr. Kantor said.

He said the administration was still prepared to impose sanctions if the Japanese government did not provide further details of its plan and carry it out by Jan. 20.

But he played down the possibility of imposing sanctions, saying the Japanese plan "indicates for the first time that the government of Japan is determined to bring about important reforms in its public sector construction market, including improved access for all foreign firms."

The Japanese decision to change the government contracting procedures is more the result of domestic political changes in Japan than any response to the threat of U.S. sanctions, said Seiichiro Noboru, the top economics official at the Japanese Embassy in Washington.

The bribery of Japanese government officials by construction companies there contributed to the downfall of the Liberal Democratic Party this summer and its replacement by a coalition of seven parties championing deregulation and other reforms.

Prime Minister Morihiro Hosokawa has set up a special council of senior politicians to draft by late December a detailed overhaul of government construction contracting practices.

By moving the U.S. deadline to January, Mr. Kantor accommodated the Japanese schedule.

The Japanese plan accepted by Mr. Kantor yesterday also called for Tokyo to bar bids by companies convicted of bribery, to improve enforcement of its anti-monopoly law and to establish objective, published standards for bidding and contracting procedures.

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