Trade deal: Few cheers from Japan


TOKYO -- Even before the official announcement of a trade deal with the United States, the sniping over terms had begun.

Business leaders qualified their relief with caveats. The applause of politicians was hedged by complaints over unresolved issues that could lead to U.S. sanctions. Most disturbing, participants differed on the crucial issue of whether Japan really committed itself to increasing the purchase of imported goods.

Perhaps the most positive reaction stemmed from what did not happen. After 15 months of recriminations and futile discussions, pTC some sort of accord was reached, blunting fears of an all out trade war.

There was concern in the financial markets "something drastic" would once again send the yen soaring, and the fact that that didn't occur "was a small step forward," said Kathy Matsui, strategist with Goldman Sachs in Tokyo.

"But there were a lot of strings left untied and very little specifics to quantify" what the agreement means, she added, dismissing claims made in Washington over the weekend that the accord would generate billions of dollars in additional sales of U.S. products.

As has been traditionally the case in prior discussions leading to an agreement, the initial statements from each side emphasized success. Yet any euphoria was muted by questions and asides and subtle shadings of language that paint different pictures of the deal.

Minutes after a senior U.S. diplomat in Tokyo gave an English language description of the agreement, saying it meant sales of foreign products into Japan should increase and criteria would exist to measure progress, Japan's Foreign Minister Yohei Kono, answering questions in Japanese, denied that either had been promised. A subsequent statement by the Foreign Ministry was almost incomprehensibly fuzzy, indicating some objective criteria would be considered, but without any time frame for measuring progress.

Broad agreements were reached in three areas: government procurement, flat glass and insurance. In glass, however, final details have yet to be worked out and the market, dominated for decades by three large firms, has resisted reform before.

Similarly, the insurance agreement appears to be incomplete. The basic outline was reached weeks, if not months, ago but only released over the weekend.

Yet within hours of the announcement, Japanese government bureaucrats were reported by the Kyodo News Service as "brushing off" a key assertion by U.S. Trade Representative Mickey Kantor that the closely-knit insurance and its ties with industry would be probed by the country's anti-monopoly agency, the Fair Trade Commission. The intricate relationships have long been cited by U.S. officials as the reason foreign insurance companies have been limited to a minute share of the Japanese market, despite what are claimed to be more innovative, cheaper and appropriate products.

Left out of the final discussions was the overall automobile market, the largest factor in the massive deficit in manufactured products between the United States and Japan, and a major area of effort throughout the negotiations.

Instead, the United States announced it would pursue sanctions in one facet of the market: replacement parts. Even here, however, the debate was clouded by parties seemingly speaking different languages.

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