WASHINGTON -- The United States and Japan reached a broad accord yesterday to open a range of Japanese financial markets to foreign competition, allowing U.S. investment firms for the first time to vie for the right to manage nearly $1 trillion in Japanese pension funds.
The accord was reached just hours before Japan's first Socialist prime minister, Tomiichi Murayama, landed in Washington for a meeting with President Clinton today.
Wall Street brokerage houses and investment advisers have complained for years about a web of government regulations and corporate relationships that froze them out of the world's second-largest pool of pension funds.
They greeted the accord with guarded optimism, questioning whether in practice they would get more than a narrow slice of the market.
The last-minute agreement allows both Washington and Tokyo to avoid a repeat of the embarrassment that surrounded the last visit of a Japanese prime minister to Washington. That meeting in February resulted in a nasty disagreement and a breakdown in negotiations that lasted nearly eight months.
Clinton administration officials hailed the financial services agreement yesterday as further evidence that their high-pressure negotiating strategy has produced major changes.
There have been agreements involving a half-dozen industries, all except the one that probably means the most to the U.S. economy -- autos and auto parts.
Japanese officials, in turn, expressed hope that the agreement would deflect the focus of today's meeting away from last year's record $60 billion trade gap between the United States and Japan.
For Mr. Murayama, who is holding on to power by only a thread, the financial services accord is also a chance to show that he can manage a relationship with the United States, which, as a Socialist, he once denounced as harmful to Japan's interests.
For years, U.S. investment advisers and brokerage houses have cited Japan's restrictions on the management of pension funds as a prime example of regulations intended to keep foreigners, along with Japanese newcomers, out of a lucrative market.
Rules issued by the Japanese Finance Ministry, the most powerful organization in a bureaucracy that runs the economy largely unchallenged by politicians, allowed only trust banks and insurance companies to manage pension funds. Foreign entries in both markets have been prohibited from managing the bulk of the funds.