After extending a deadline for decision by 13 hours, the United States succeeded on Saturday in extracting from Japan a promise to open an additional 17 large construction projects worth $7.5-billion to bidding by American and other foreign companies. Until Washington took up construction as an issue in U.S.-Japan economic relations, Japan's construction industry was one of the most tightly closed segments of Japanese business. It is still regarded as dominated by bid-rigging and collusion among contractors, politicians and government officials.
In negotiations that lasted nearly all night, Japan added three projects to a list of 14 that it had offered to open to foreign bidding during earlier negotiations that dragged on for nearly a year.
The total of 17 fell short of the 26 or 27 that J. Michael Farren, an undersecretary of commerce, said the United States had asked be added to an original list of 17 approved in a bilateral agreement in 1988. Japan, however, promised to add six projects, including a new international airport for Nagoya, when official decisions are made here to undertake them.
In April, Carla Hills, U.S. trade representative, threatened to start proceedings to impose sanctions on Japan if an agreement was not reached by midnight Friday. A 13-hour extension of the deadline _ to midnight Friday Washington time _ moved the negotiations from what Farren, in a news conference late Friday night, described as "an impasse" to a conclusion.
After Hills made her threat to bar Japan from federally funded U.S. construction projects, Japan retorted that it would counter-retaliate by withdrawing special measures it has taken since 1988 to help American companies win a piece of the Japanese construction market. Since the original pact was signed, 32 U.S. companies have been licensed to do business here.
Although the U.S. Embassy said the agreement "will make a positive contribution to U.S. construction firms seeking access to the Japanese construction market," its economic impact was expected to be minimal.
On the projects worth $25-billion that were opened to foreign bidding three years ago, American companies, as of the end of April, had won contracts worth only $440-million, including design and architectural work, payments for which do not show up in trade statistics. Retaliation, on the other hand, would have denied the Japanese the opportunity to continue work on only about $100-million worth of current projects, Farren said.
Although American red ink in trade with Japan has fallen by nearly a third from a peak of $59.8-billion in 1987, it still amounted to $41-billion last year. Through April, the U.S. annual trade imbalance was at $44-billion.