[Congressional Record Volume 144, Number 70 (Wednesday, June 3, 1998)]
[Extensions of Remarks]
[Page E1009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 STATEMENT CONCERNING ENFORCEMENT OF THE U.S.-JAPAN INSURANCE AGREEMENT

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                           HON. JIM McDERMOTT

                             of washington

                    in the house of representatives

                        Wednesday, June 3, 1998

  Mr. McDERMOTT. Mr. Speaker, I wish to bring to the attention of this 
body and the American people a matter of serious concern regarding 
current violations of the U.S.-Japan Insurance Agreement. Against a 
backdrop of a rapidly expanding trade deficit, continuing Asian 
financial crisis, and growing skepticism regarding international trade 
agreements and institutions such as the IMF, it is crucial for the 
Administration to ensure that major U.S. trading partners live up to 
their obligations under existing trade agreements with the United 
States. Nevertheless, clear violations of the U.S.-Japan Insurance 
Agreement are now taking place virtually unchallenged.
  The U.S.-Japan Insurance Agreement is designed to promote 
liberalization of the Japanese insurance market by preserving the third 
sector, where U.S. companies have traditionally had success, until the 
primary first and second sectors have been liberalized by the Japanese 
Government. This basic bargain, struck by the governments of Japan and 
the United States in 1994 and strengthened in 1996, has been put at 
serious risk by the activities of Yasuda Fire and Marine Co., Ltd. who 
has used its relationship with its affiliate and de facto subsidiary 
INA Himawari Life Insurance CO., Ltd. to prematurely ramp up its 
presence in the third sector.
  The seriousness of this breach cannot be overstated. If Yasuda is 
allowed to continue expanding its presence in the third sector prior to 
the substantial deregulation of the life and non-life sectors, the 
Agreement will be left without its primary incentive for compliance by 
Japanese firms (i.e., the promise of access to the third sector).
  Yasuda's current activities also pose a serious challenge to U.S. 
trade policy. The Japanese insurance industry knows that obtaining this 
agreement required intense efforts by senior U.S. Government officials, 
including the President of the United States. If the United States is 
unable to take vigorous actions against Japan's clear violation of the 
U.S.-Japan Insurance Agreement, it will send a lasting and damaging 
message to Japan and Japanese industry, as well as to those countries 
that would negotiate with us in the future.
  Despite its failure to comply with the Agreement's critical third 
sector provisions, Japan appears ready to start the two and one-half 
year countdown to opening the third sector to large Japanese companies 
on July 1 of this year. Absent measures to correct the violations, this 
action would breach both the letter and the spirit of the U.S.-Japan 
Insurance Agreement. This situation requires swift action by the 
Administration. The U.S. insurance industry's continued viability in 
the Japanese market depends on the full and effective enforcement of 
this agreement.

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