UNITED STATES CONTINUES TO PRESS JAPAN TO DEREGULATE ACROSS A BROAD SPECTRUM OF ECONOMIC SECTORS
In bilateral talks held throughout October and continuing into November, senior U.S. officials have continued to press Japan to deregulate a wide array of economic sectors. These discussions are largely focused on the package of 270 deregulatory proposals that the United States presented to Japan in October.Japan already appears to be implementing one key aspect of the U.S. proposals relating to governmental transparency. The United States requested that the GOJ implement notice and comment rulemaking procedures on a government-wide basis. It now appears that the Japanese Management and Coordination Agency will soon recommend and propose the implementation of a notice and comment procedure. This action is intended to be completed by the end of March 1999 as part of a broad GOJ deregulation package.
The pressure on Japan to deregulate also is being directed from the EU and Canada, which have recently presented Japan with their own deregulation proposals for the Japanese economy. The EU and Canada, like the United States, view Japan's 1999 review of its deregulation program as an opportunity to seek far-reaching reform from Japan.
Japan's key trading partners have presented their deregulatory requests within the context of the need for Japanese economic growth. This approach differs in tone and substance from that used by the United States in recent years, which attacked the regulatory infrastructure in Japan as a barrier to trade (as argued in the Fuji-Kodak film dispute). By now presenting deregulation as an economic growth issue necessary to Asia's economic recovery -- as opposed to a bilateral trade dispute or a debate over whose economic model is superior -- the United States may be better positioned to encourage Japanese reform.
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FORESTRY AND FISHERIES DISPUTE
The bipartisan leadership of the Senate Finance Committee has asked the International Trade Commission to investigate trade and economic barriers facing U.S. pulp and paper exports to Asia, Latin America and Europe.On a related note, Japan's Minister of Forestry and Fisheries Shoichi Nakagawa visited the United States during the first week of November for talks with USTR Charlene Barshefsky and Secretary of Agriculture Dan Glickman. At one meeting, Nakagawa informed the U.S. government that Japan will not liberalize certain sectors, as had been previously agreed.
U.S. officials said that Japan's decision not to liberalize would cause this month's Asia-Pacific Economic Cooperation ("APEC") meeting in Malaysia to fail. Deputy USTR Richard Fisher remarked that Japan's absolute refusal to negotiate will cause other nations to do the same, especially with regard to "Early Voluntary Sector Liberalization" ("EVSL"). EVSL would cut tariffs and trade barriers on environmental products and services, energy, fisheries, forestry, toys, jewelry, medical goods, chemical products and telecommunications. Despite the apparently grim prospects for the meeting, the White House has confirmed that President Clinton will participate in the meeting for heads of state on November 17 and 18.
Minister Nakagawa had previously urged that liberalization of fishery and forestry products not be discussed at the November APEC meetings in Malaysia, despite a seeming consensus to the contrary. Various Japanese officials, including Nakagawa and Ambassador to the United States Kunihiko Saito, had previously commented that APEC was not the proper forum for such discussions, arguing that Japan would prefer APEC to concentrate on the looming financial crisis. Further, Ambassador Saito has noted that Japan's tariffs on forestry and fisheries products have been lowered significantly, while the concerned industries continue to fair poorly. Domestic pressure should make it difficult, if not impossible, for the Obuchi government to compromise on early liberalization.
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OTHER TRADE NEWS IN BRIEF
Calls for Deregulation from WithinJapan's most influential industry organization, Keidanren (the Federation of Economic Organizations), submitted more than 300 proposals for deregulation to the GOJ in late October. Keidanren's deregulation proposals now total more than 550. The proposals included submissions on employment agencies, pension plans, corporate regulations, the sale of drugs, construction, standards for hazardous materials, financial software, automobile sizes and private postal carriers.
U.S. Renews Requests for Purchase of U.S. Auto Parts
After a two-day review of the U.S.-Japan 1995 automotive deregulation agreement in San Francisco, U.S. trade officials indicated that they hoped Japanese companies would update 1995 plans for the purchase of auto parts from U.S. manufacturers. While not providing details, the U.S. officials said any new plan was unlikely to be as ambitious as previous efforts as a result of poor Japanese economic conditions.
In addition, Japanese negotiators agreed to consider U.S. proposals to promote imported vehicles and ease the vehicle regulation process. The Japanese side declined to consider U.S. suggestions to increase the number of small garages permitted to work on automobiles.
Japan to Appeal WTO Apple Ruling
Japan will appeal the finding of a dispute settlement panel at the World Trade Organization that concluded there was no scientific basis for Japan's apple testing regime. U.S. apple producers had contended that redundant testing requirements impeded access to the Japanese market. Due to depressed financial conditions abroad and especially in Asia, U.S. producers have been left with unsold apples that are literally rotting in storage.
Cross-Border Emissions Trading to be Proposed
The GOJ will propose a plan to combat global warming that includes the trading of emissions credits between private companies in different countries. Japan will make the proposal at the Fourth Conference of the Parties to the 1992 United Nations Framework Convention on Climate Change in Buenos Aires, which is scheduled to end November 13. Japan will also propose that the next conference be postponed from 1999 to 2000. Emissions credits would allow countries that fail to meet their legally binding emissions reduction specifications to buy credits from countries that have excess capacity. Japan's aggregate carbon dioxide emissions from industry rose in 1997.
Japanese Government Urges International Financial Watchdog
PHJ&W has learned that the GOJ plans to pitch a global financial watchdog agency at the November meeting of G-7 finance minsters and central bank governors. The proposal entails creating the watchdog organization from parts of the International Monetary Fund, the World Bank and the Bank for International Settlements with similar functions. The watchdog group would oversee forms of speculative trading such as hedge funds by monitoring institutional investors and forcing financial disclosures from suspect funds.
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