[Congressional Record Volume 140, Number 138 (Wednesday, September 28, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                    UNITED STATES-JAPAN TRADE TALKS

 Mr. ROCKEFELLER. Mr. President, I wish to express 
encouragement and support to our trade negotiators who are once again 
entering the 11th hour in negotiations with Japan over their unfair 
trade practices. We have learned from previous administrations, who 
have backed down in the face of Japanese intransigence, that only firm 
and consistent pressure will make sustained progress on this most 
intractable of bilateral trade problems.
  Sustaining such pressure may be particularly difficult right now 
because I sense that many people may have tired of the struggle. We 
have worked so hard for so many years to penetrate the Japanese market, 
it is no surprise that people are weary. We have had to expend enormous 
amounts of government and private sector energy to make even modest 
inroads. Yet it is precisely at this point, when the long-term economic 
fundamentals in both Japan and the United States are moving in our 
favor, that we should continue to apply pressure.
  That is why earlier in this Congress I introduced, with House 
Majority Leader Gephardt, the Fair Market Access Act of 1994 (S. 1872). 
The goal of our bill is to apply consistent pressure by establishing a 
structure for setting measurable targets for our trade negotiators in 
order to give the administration and its successors more tools in the 
seemingly never-ending fight to open Japan's markets. I did not pursue 
S. 1872 this year in large part because I wanted to see how the 
framework talks would conclude. I still hold out hope that our 
outstanding differences will be settled, and I applaud President 
Clinton and Ambassador Kantor who have rightfully set real results and 
real market access as their goals.
  Those results must include progress in reducing the cartel behavior 
that blocks many United States goods and services from being imported 
into Japan. Agreements that tear down these barriers, open Japan's 
market to United States imports, and are backed by measurable criteria 
for assessing progress, will provide enormous benefits to the economies 
of the United States, Japan, and the entire world.
  A recent article by Clyde Prestowitz and Alan Tonelson of the 
Economic Strategy Institute makes this case in plain dollar figures. 
They estimate that Japan's trade barriers are costing the United States 
$50 billion in annual exports; $50 billion, and as many as 1 million 
jobs. Worldwide, Japan's trade barriers are depressing global economic 
output by $400 billion. That is a staggering amount.
  And let's not be fooled by those who say we are merely trying to 
export America's economic problems to Japan. For years, Japan pleaded 
with us to cut our budget deficit, and President Clinton finally did it 
to the tune of $500 billion over 5 years. The biggest budget cut the 
world has ever seen.

  Nor can American lack of competitiveness be blamed here either. 
American businesses, from heavy industry to high technology, have made 
a remarkable turnaround in recent years. Yet, as Prestowitz and 
Tonelson point out, this has had no positive impact on exports to 
Japan, despite the fact that the yen continues to rise and make our 
products cheaper. Indeed, that very increase is compelling evidence of 
the rigidities in their economy that cause them to pile up huge 
surpluses.
  In fact, the whole point of the framework talks was to pinpoint 
precisely those areas where the Japanese Government plays a role in 
maintaining trade barriers and where the United States is most 
competitive around the world. The framework emphasized areas such as 
Government procurement of high technology telecommunications and 
medical equipment, major sectors such as automobiles and auto parts, 
regulatory reform in services like insurance, and areas where we 
already had agreements, such as in flat glass.
  Everywhere else in the world American industries in these sectors not 
only are competitive, they are doing well. Yet in Japan, our businesses 
face hurdle after hurdle. Distribution networks closed to our products; 
customs practices that stall our products at the docks; regulations 
that are impossible for foreign companies to comply with; practices 
that are as effective as an embargo; and cartels, keiretsus, that block 
our companies from entering anywhere in the vertical supply chain. Add 
to this continual changes at the top of the Government--four prime 
ministers in 1 year--and a bureaucracy that is accountable to no one 
and you have a perfect mix for intransigence.
  President Clinton and our trade negotiators should not feel the 
slightest doubt from this Congress about the importance of standing 
firm on resolutions of these issues. The consequences of Japan's market 
barriers are not abstractions or minor irritants. They have direct 
effects on the industries, their workers and families, and communities 
in our States. West Virginia is full of industries, large and small, 
that make products for sale all over the world. We know we have to 
compete, and as part of a country that is an open lane to our trading 
partners who import their products, services, and goods to buyers in 
the United States. But West Virginians expect their Government and this 
Congress to insist on a two-way street with Japan. As Japan takes 
advantage of the international marketplace to build its economy, it 
cannot continue protecting its own industries from the rest of us.
  The only way we can respond is to be resolute and to make clear that 
we won't settle for a bad deal. A credible threat of sanctions seems to 
be the only way to convince the Japanese to come to terms and make an 
enforceable deal. The cellular agreement that Motorola negotiated 
earlier this year is a perfect example. We cited Japan for not 
complying with previous agreements, and with the threat of imminent 
sanctions hanging over their head, they finally came to the table and 
negotiated a reasonable deal. To abandon the quest for more successes 
like this at this critical juncture would send exactly the wrong 
signals to currency markets and our other trading partners.

  With respect to the specifics of the talks, it is important to note 
that the sectors on the table were not chosen haphazardly. We 
specifically identified areas where American industry is most 
competitive, and where we could identify a legitimate market 
opportunity in Japan.
  I want to focus on two of the framework sectors to show just how 
strong our position is: flat glass and telecommunications procurement.
  Flat glass includes items like insulating glass, safety glass, and 
high performance coated glass. American flat glass makers are globally 
competitive--with market shares approaching 25 percent in Europe and 
Latin America--yet the United States has less than 1 percent of Japan's 
$4.5 billion glass market, and our minimal market share has continued 
to experience a year-to-year decline in both absolute and percentage 
terms. In sharp contrast, Japanese glass makers account for 20 percent 
of United States sales.
  The explanation? A cartel of three Japanese companies has divided the 
market for two decades, maintaining steady market shares in a 5-3-2 
ratio. This cartel perpetuates the closed distribution system that 
represents the most egregious market barrier facing U.S. glass makers. 
With few exceptions, each of the approximately 400 wholesalers and 
distributors of flat glass in Japan represent only one Japanese 
manufacturer. Only a small handful of distributors with nominal market 
share are even willing to handle imported glass. Japan even 
acknowledges the cartel, admitting in a Japan Fair Trade Commission 
report that there is a ``state of monopoly by three makers, pricing by 
consensus, and creation of sales networks of distribution by each 
maker.''
  To correct this imbalance, Japan promised in a 1992 ``Action Plan'' 
signed by President Bush and Prime Minister Miyazawa to ``substantially 
increase market access for competitive foreign flat glass 
manufacturers.'' Two years later, it is clear from the numbers that 
this commitment has not been kept. Despite active bilateral 
negotiations, Japan has failed to take meaningful action and is in 
effective violation of our trade agreement. And that is why 6 months 
ago the trade representative's office identified in its National Trade 
Estimates Report access to Japan's flat glass market as a priority 
foreign trade objective.
  The other area I want to comment on today is Government procurement, 
specifically of telecommunications equipment. Japan is planning to 
invest nearly half a trillion dollars in telecommunications 
infrastructure over the next 15 to 20 years. Half a trillion dollars of 
real money, real jobs, and real market opportunities for American 
companies and companies from around the world. Overall procurement 
plans by the Japanese Government over the coming decade are among the 
most significant market opportunities in the world. Our negotiators 
must be resolute. It is vital that American industry has a fair 
opportunity to compete for that business.
  America is the world leader in information technologies. Our fiber 
optics and ATM switching and wireless communications are second to 
none, just to name a few of the telecommunications technologies that 
the Japanese telecommunications company, NTT, will deploy in its 
network. If we have an open and nondiscriminatory opportunity to sell 
in the NTT market, we will win a major share of it. Unfortunately, NTT 
has had a history of discrimination against foreign manufacturers. 
Since the agreement that was signed in the early 1980's to open the NTT 
market, foreigners have gained only a 6 percent market share. This is 
far below the market share United States companies have been able to 
command in the non-NTT telecommunications market in Japan and in other 
export markets. The evidence here is clear, NTT has discriminated 
against United States companies, and the Government, through the 
Ministry of Finance, still has both legal and effective control of NTT. 
The Government can clearly solve this problem if it wants to.
  These are just two of the areas where we are negotiating with Japan. 
They are particularly important to the glass workers of my State of 
West Virginia. This part of our economy that makes advanced glass 
products--things like fiber optics and technologically advanced flat 
glass--has generated new jobs over the last 10 years, and it is 
critical that we fight for their access to markets worldwide.
  The other areas we are negotiating with the Japanese are mightily 
important, too. Our autos are competitive the world over; yet you could 
drive on the streets of Tokyo for hours without seeing an American car. 
Our auto parts are state of the art, but the Japanese inspection system 
effectively keeps them out of the market for replacement parts. From 
medical technologies to service sector regulations, our negotiators 
must stand tough and make good deals. If the Japanese cannot be brought 
into agreements that will mean real results, real market access, then 
we must take appropriate action.
  Such action is not my goal. What I want to see, and what these 
industries want to do, is the selling of United States products in 
Japan. But if Japan will not come to reasonable agreement in these most 
reasonable areas, then we must do what is necessary. No more empty 
promises and vague statements of intent.
  I beseech Japan's leaders and negotiators to recognize the reasons 
that they should give our industries and products the same treatment 
that they expect and get all over the world including in the United 
States. I urge President Clinton and Ambassador Kantor to fulfill their 
obligation both to America's interests and the principle of fair trade 
that shoud be the basis of the strengthened relationship that we seek 
with Japan.

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