Motorola Inc., the Schaumburg-based electronics giant that has waged a 10-year battle for access to Japan’s cellular telephone market, once again is in the middle of a critical U.S.-Japan trade dispute.
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While Motorola’s position in the latest fracas may be coincidental, it could be serendipitous for the Clinton administration, which is faced with mounting domestic criticism over the U.S. trade deficit with Japan, estimated at about $60 billion for 1993.
President Clinton threatened Monday to level retaliatory trade sanctions against Tokyo in the aftermath of a breakdown last week of eight months of negotiations aimed at prying open Japan’s telecommunications, automobile, medical equipment and insurance markets.
Clinton’s still-undeclared package of possible trade sanctions is being reviewed at the same time the U.S. has reached a deadline to act on a complaint by Motorola that Japan violated a 1989 agreement to open its cellular telephone market.
“The cellular case is really quite coincidental,” said Clinton, “but it’s illustrative of the same problem. That is, we have been engaged in these talks on cellular telephones for a very long time. . . . It’s a good illustration of the problems we face entering the Japanese market.”
Clinton could hardly have a better battering ram to initiate sanctions than Motorola, a company that is respected in Japan for the quality of its products, including its pagers and MicroTac cellular telephones.
Motorola also is an example of an American company that has gone to Japan and played by the rules. It has adapted products to the Japanese market and has been adept at walking the trade tightrope between Washington and Tokyo. While Motorola doesn’t divulge market information, analysts in Japan say the company did about $1.5 billion in sales there in 1992.
Still, any sanctions Clinton might place against Japanese cellular telephones sold in the U.S. would be little more than a slap on the wrist, because Motorola, American Telephone & Telegraph Co., Sweden-based Ericsson and the Finnish company Nokia Mobile Phones have the lion’s share of the U.S. market.
Japanese manufacturers such as Oki, Fujitsu and Matsushita account for about 10 percent of the cellular telephones sold in the U.S., a Motorola official said.
In addition, a Senate trade official added that any sanctions applied to Japanese cellular equipment would be small. “This is designed to make the point that the United States is serious, rather than balancing the trade scales,” the official said.
Motorola, meanwhile, has gained about a 25 percent share of Japan’s cellular market since the mid-1980s, when it was granted access to several outlying areas, according to analysts.
But it effectively has been shut out of the Tokyo-Nagoya market, which has about 60 percent of Japan’s 1.7 million cellular customers.
The 1989 agreement arose from complaints by Washington that the Japanese government had denied Motorola’s TACS cellular telephone system “comparable market access” as specified by the 1985 Market Oriented Sector Specific, or MOSS, talks. Under the agreement, Motorola was to be granted equal access to the Tokyo-Nagoya corridor.
That market is controlled by Japan’s giant NTT Corp., whose equipment uses a standard incompatible with Motorola’s equipment.
“We feel like we’ve been slow-rolled to death,” a Motorola official said Monday. “It’s the same kind of sanctuary strategy the Japanese have used to restrict other products in their markets.”
Clinton was asked whether action on behalf of Motorola might lead to a trade war with Japan. “It could,” he responded. “But they would have to think long and hard about (retaliating).”
Clinton administration officials hinted that in addition to applying sanctions specifically against Japanese cellular phones, the president might revive the long-dormant Super 301 provision of the 1988 Omnibus Trade Act.
That provision, used in the early days of the Bush administration but not since, allows the U.S. government to take a broad range of retaliatory steps against what it deems “unfair” traders.
In 1989, the last time the provision was invoked, Japan, India and Brazil were targeted for action.
An aide to Sen. Max Baucus (D-Mont.), chairman of the Senate Trade Subcommittee, said Clinton could announce Tuesday that by executive order he is resurrecting Super 301.
U.S. Commerce Department figures for the first 11 months of 1993 show that the U.S. racked up a $54 billion merchandise trade deficit with Japan. With the shortfall averaging about $5 billion a month and widening, the surplus likely topped $60 billion for 1993-a record that would exceed the $57 billion deficit the U.S. recorded in 1987.
The deficit is the result of Americans buying more from Japan that they sell to Japan. In November the U.S. exported $3.76 billion in goods to Japan but imported $9.48 billion in Japanese goods.
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In the first 11 months of 1993 the U.S. exported $43.69 billion in merchandise to Japan, making Japan the second-biggest foreign market for U.S. goods, after Canada. Japan’s exports to the U.S. for the same period totaled $97.70 billion.
A former trade official who served under the Bush administration said that even if Japan fulfilled every trade obligation it has made with the U.S. by the end of the 1990s, the bilateral trade deficit probably would shrink no more than 20 to 25 percent.
The complaint Motorola lodged with the Clinton administration gives the president an opportunity to take some action, the Bush administration official added.