Japan steps up efforts to open its market to imports

Japan steps up efforts to open its market to imports

By Vincent Lingga

JAKARTA (JP): No matter who replaces Morihiro Hosokawa as prime minister, the Japanese government will step up its economic reform measures to open its market wider to imports, says Koichiro Matsuura, a former deputy minister of foreign affairs.

Matsuura told The Jakarta Post here on Friday that in addition to the 15.2 trillion yen (US$145 billion) economic pump-priming program announced in February and the market-opening package issued last month, another major package of economic reform measures is in the pipeline.

"All this will significantly reduce our current account surplus," he said in recounting what his government has done and will do to resolve its trade dispute with the United States.

He cautioned, however, that the Japanese government could not be asked to do things beyond its reach.

Japan's big trade surplus has been "a thorn in the flesh" within its relations with the U.S. since the second half of the 1980s. Despite the sharp appreciation of the yen from around 234 to the U.S. dollar in August 1985, to around 104 today, Japan's trade surplus with the U.S. has tended to increase. It rose from $17 billion in 1982 to $56.8 billion in 1987, went down to $41 billion in 1990, but surged again to $49 billion in 1992 and to more than $50 billion in 1993.

"We will continue to pursue measures to stimulate our domestic market demand which will in turn boost imports, but we cannot do things beyond our ability to control," the senior diplomat said.

Matsuura, who visited here for a few days last week, talked to the Post about issues surrounding the Japan-U.S.trade impasse and the efforts his government had made and will implement to resolve the trade friction.

The following are additional excerpts from the interview.

Matsuura said: I am confident that the measures adopted so far and those which will yet be implemented after June will significantly reduce Japan's current account surplus within the medium term.

At the end of March, for example, soon after the launching of the 15.2 trillion yen domestic economic stimulus, Japan unveiled a package of market-opening initiatives that included:

o Additional public works spending on top of a 10-year government goal of 430 trillion yen ($4.1 trillion) between 1991 and 2000.

o Stricter enforcement of anti-trust laws and strengthening of the Fair Trade Commission.

o Ways to prevent bid-rigging, including a guideline on public works contracts.

o Improvement of government procurement procedures and incentive measures for imports.

Yet, more massive, significant reform measures will be adopted before June to promote sustainable domestic demand-led economic growth.Included in the coming package:

o Income-tax reduction which will spur domestic consumption

o Further deregulation measures to improve market access, ensuring international consistency with standards and approval systems and simplified procedures related to : Real estate and land, information and telecommunications equipment, distribution and flow of goods, licenses, approvals and inspection standards, financial, securities and insurance markets.

o Further improving the transparency, fairness and competition for government procurements.

I admit there is a pervasive pattern of what overseas businessmen call collusive corporate practices between Japanese companies in favor of domestic products that make it extremely difficult to enter the Japanese market.

But not all those exclusionary business deals, which in Japan are called keiretsu, can be classified as unfair. Many are acceptable but some are unacceptable. We will deal with the unacceptable practices but we can only persuade or try to solicit cooperation of companies to change their keiretsu practices in order to increase imports.

For example, we cannot force but only persuade Japanese automobile firms to procure more parts or components from the U.S. That lies entirely within the power of the companies to decide.

This case once again shows the limits of what the Japanese government can and cannot do. That also is the main reason why Japan has persistently rejected the U.S. demand for numerical targets for its market-opening measures. Not only because such a scheme runs against the market forces but it is also extremely difficult to set objective criteria to measure such targets.

With regard to possible resumption of trade talks with the U.S., I don't think the ball is now only in our hands. Instead, I reckon, we play not only one but several balls. We have some and the U.S. has balls of their own to play to reach a mutually beneficial agreement.

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