Trade Talks Stall as Deadline Nears : Commerce: Unless pact is reached today, U.S. has vowed stiff tariffs on Japanese luxury cars. Nations reported far apart on opening Japanese auto market.
GENEVA — Talks intended to pry open Japan’s market to American autos and auto parts entered their final stage today with negotiators reporting no major movement toward a settlement that would avoid massive U.S. tariffs on Japanese luxury cars.
The negotiators, led by U.S. Trade Representative Mickey Kantor and Ryutaro Hashimoto, the Japanese minister of international trade and industry, met into the early morning hours at a Japanese diplomatic mission on a hillside overlooking Lake Geneva. They were to resume at 11 a.m. today local time.
“I don’t think anything has changed,†one downbeat U.S. official close to the talks said late Tuesday night, echoing negotiators who reported that a wide distance separated the two sides as Kantor headed for his third one-on-one meeting of the day with Hashimoto.
The pessimism underscored a pervading sense that the United States and Japan are on a collision course, with no assurance that either will veer off at the last minute to avoid what threatens to be the worst trade fallout between the two allies and economic rivals since World War II.
Unless an agreement is reached today, the Clinton Administration has vowed to impose the stiffest trade sanctions in the history of U.S. trade with Japan--a 100% tariff on 13 models of Japanese-made luxury cars.
In talks that lasted all day and night, Kantor, Hashimoto and their top aides met repeatedly in a modern, block-like building that borders on a cemetery and a small orchard. They then retreated to reassess their positions among their larger delegations before resuming direct talks.
Before the evening session began, a U.S. official said the two sides had “crystallized the issues, and there is a much clearer understanding of what the issues are.â€
Such a clarification would be a necessary step before an agreement, the aide said, adding that the clarification would not necessarily lead to an agreement.
“It’s going to be a long night,†predicted Ira Shapiro, Kantor’s general counsel, who has been deeply involved in the talks.
And Hashimoto, who emerged from one private session with Kantor to report that “it was a very friendly fight,†said he had never been optimistic about the outcome.
But officials took pains to avoid any detailed discussion of the issues or the current offers.
One aide said Kantor would prefer to avoid “informed speculation about what is on the table and why.â€
Earlier Tuesday, word was circulated that President Clinton had already set aside time today to deliver a tough public message to the nation about the dispute.
U.S. officials here acknowledged that the disclosure of Clinton’s address was an element of public diplomacy intended to make clear to Japanese negotiators that the White House had no plan to back down and that the deadline would not be shifted.
Although the negotiators have been meeting under the gun of today’s deadline, it is an imprecise deadline at best.
Only the day, not a specific hour, has been specified for the U.S. Customs Service to begin collecting the 100% tariff rather than the 2.5% tariff now charged on imported luxury automobiles.
In any event, the Customs Service said it would begin collecting the taxes whenever Kantor gave the order.
“The Federal Register [in which the government publishes notice of such regulations] is silent as to time,†said Anne R. Luzzatto, Kantor’s spokeswoman.
Moreover, the U.S. delegation has not said it will refuse to negotiate after the sanctions go into effect, although Kantor is committed to travel to Denver on Thursday for an unrelated trade meeting. And Hashimoto, suggesting a readiness to continue talking, has emphasized that the deadline was imposed by the United States, not Japan.
Clinton, whose sanctions policy was challenged Tuesday during an economic development conference in Portland, Ore., sounded defensive when he responded to a questioner there:
“I am not trying to launch a new era of protectionism, but we have tried now for two or three decades to open this market, and this is the last major block to developing a sensible global economic policy.
“The bottom line is: We want to open the markets for American products. And we will take action if necessary in the form of sanctions. We hope it will not be necessary,†the President said.
For all the years U.S. and Japanese negotiators have been meeting on dozens of trade issues, no other dispute has reached quite the level of anxiety produced by these auto talks. This stems from the economic impact of the auto industry in each country and the belief in other industrial nations that the United States is defying rules of international trade, a perception that could lead to retaliation by Japan and a widening trade war.
The dispute centers on the U.S. effort to get Japan to remove barriers--including government regulations and informal agreements between companies throughout the Japanese automotive industry--that the White House says make it nearly impossible for U.S. companies to tap into the lucrative Japanese automobile and auto parts market.
Specifically, the United States wants a commitment that Japan will buy more U.S.-made parts for new automobiles and for repair work. The White House also wants a system to measure the increase, a course Japan has resisted on grounds that it amounts to “managed trade.â€
Among other charges, the United States has said Japan’s bureaucracy has set such stringent standards for vehicular inspections that it has effectively blocked foreign companies from selling new cars and parts.
The resulting lack of foreign competition has driven up the cost of auto parts to Japanese consumers by as much as 600%, according to one private study.
The United States has also pushed Japan to make it easier for the Big Three U.S. car makers--Ford, General Motors and Chrysler--to sell American models through existing dealerships in Japan.
Japan responds that it cannot dictate terms to private companies.
After 20 months of fruitless negotiations, Kantor announced on May 16 that unless an agreement was reached, the United States would boost the tariffs on imported vehicles from the 2.5% now to 100% on 13 models of Japanese top-of-the-line cars on June 28.
The tax would be retroactive to all imports that arrived after May 19.
The affected Lexus, Infiniti, Acura, Mitsubishi and Mazda models are manufactured by Toyota Motor Corp., Nissan Motor Corp., Honda Motor Corp., Mazda Motor Corp. and Mitsubishi Motor Corp.
