WASHINGTON – The United States is considering seeking a renewal of the 1995 auto and auto parts trade agreement with Japan, which will expire at the end of this year, a U.S. administration source said Friday.
“The U.S. government has begun consulting with U.S. industry, labor groups, and other interested parties to develop a position on what type of follow-on agreement it will seek once the current automotive agreement expires at the end of 2000,” the source said, referring to an annual trade report to be issued later in the day by the Office of the U.S. Trade Representative.
The National Trade Estimate Report on Foreign Trade Barriers says the U.S. remains “concerned about the lack of progress” in eliminating barriers and expanding sales opportunities in the automotive sector in Japan, although it recognizes progress in some areas, the source said.
This year’s trade report covers 54 items in 11 sectors, including telecommunications, financial services, agriculture and steel.
The report reiterates U.S. readiness to file a complaint with the World Trade Organization over access to Japan’s telecommunications market, according to the source.
Japan’s efforts to tackle the issue of connection fees charged by Nippon Telegraph and Telephone Corp. to its competitors “will come under heavy scrutiny,” the source said.
Japan wants to reduce the access charges by 22.5 percent over four years but the U.S. is seeking a cut of up to 50 percent over a two-year period.
The USTR said Thursday in a separate telecom trade report that the U.S. will make a decision by the end of July on whether to take the case to the WTO.
The report says U.S. trade deficits with Japan widened in 1999 primarily because of the weak Japanese economy and the strong growth of the U.S. economy, the source said.
It therefore urges Japan to continue to use all available macroeconomic measures, strengthen its financial system and further promote deregulation to rectify the bilateral trade imbalance.
Meanwhile, the report says steel trade with Japan remains a concern despite a 54 percent drop in 1999 in steel imports from Japan, saying the U.S. government will continue to monitor Japan’s steel exports to ensure they will be reduced to “pre-crisis levels on a sustained basis,” the source said.
The U.S. claims steel imports from Japan surged in 1998 as Japanese companies increased exports to the U.S. market as a result of a sharp drop in steel demand in Japan and other Asian countries.
The annual trade policy report says fundamental causes of the surge need to be tackled to prevent another import surge in the future, the source said.
As for the agriculture sector, the U.S. reiterates dissatisfaction in the report over access to Japan’s rice market, and hinted at further action, such as taking the case to the WTO, by saying it “will consider all of its options,” according to the source.
The report says full market access for American rice has yet to be secured despite Japan’s commitments to open its domestic rice market as a result of the previous global trade liberalization talks of the Uruguay Round.
It also says imported rice “rarely reaches end consumers” and instead is “either placed into stocks or exported as food aid” to other countries, according to the source.
In the financial services sector, the report warned against expanding the so-called “kampo” postal insurance business.
“Any expansion of kampo into product lines being offered by private insurers is inconsistent with Japan’s goals of deregulation and ‘Big Bang’ market reforms,” the source said, referring to the report.
The report also calls for greater access by U.S. construction firms to such public works as the Central Japan International Airport and Kyushu University Relocation Project, the source said.