U.S.-Japan Consultations on Insurance Expected to Intensify in June

The United States and Japan are expected to enter into consultations this month regarding the implementation of the bilateral insurance agreements and, specifically, the scheduled July 1 start date for the two and one-half year clock for Japanese entry into the third sector ("the third sector clock"). These talks are expected to commence in June and will include discussions at working and political levels, in addition to possible discussions between Deputy USTR Fisher and his MOF counterpart.

In particular, we expect USTR to focus on the following issues regarding the start of the third sector clock:

• premature entry of Japanese companies into the third sector, and

• lack of transparency in the implementation of measures required by the 1994 and 1996 insurance agreements.

A U.S. focus on entry and transparency issues would be consistent with the general approach U.S. officials recently have taken regarding trade disputes with Japan. Following the Kodak-Fuji decision, U.S. officials have consistently complained about the lack of concrete results arising out of the numerous trade agreements reached between Japan and the United States. Therefore, it would not be surprising for the United States to press Japan to demonstrate concrete results from the insurance agreements, rather than just technical compliance with the text of the insurance agreements.

We also understand that Deputy USTR Fisher, after about half a year on the job, is now considered to be fully briefed on Japan-related issues. Therefore, Fisher is likely to re-engage Japan on a variety of issues at a higher level than had been previously possible following several senior level changes that occurred at USTR over the last year. Thus, the time is ripe for Fisher to try to make an imprint on U.S.-Japan issues, and the July 1 date for the start of the third sector clock provides a good opportunity for him to make such an imprint.