Tokyo Answers the Call

The dispute was kindled by just one U.S. company's frustration with a protected market niche in Japan, but the issue nearly triggered a major trade confrontation between the two countries. Last week Japan defused the standoff by agreeing to remove barriers to foreign products in the lucrative Tokyo-area market for mobile-telephone and two-way-radio services. Said U.S. Trade Representative Carla Hills, who negotiated the pact: "The measures should provide immediate improvements for U.S. companies in these two high-growth segments of the Japanese telecommunications market."

The dispute began in earnest when Illinois-based Motorola complained to the U.S. Government last April that Japan was reneging on part of a 1985 agreement to open up its telecommunications market. After reviewing the accord, Hills determined that the Japanese Ministry of Posts and Telecommunications was requiring stricter licensing procedures for foreign companies than for domestic competitors and would not assign any radio frequencies for Motorola- produced equipment in the Tokyo area. Hills declared that if the ministry did not change its position by July 10, she would slap punitive duties on a range of Japanese products. After ten days of talks, the two sides hammered out an agreement that eases the two-way-radio regulations, grants radio frequencies to Motorola's mobile phones in Tokyo and surrounding cities, and guarantees the company access to 40% of new two-way-radio licenses in Tokyo.

The hard-line U.S. position was prompted by the trade bill passed by Congress last year, which compels the Trade Representative to battle foreign protectionist barriers aggressively. Japan's willingness to give ground last week was an encouraging sign that the country is determined to avoid a major blowup in forthcoming rounds of barrier-bashing talks required by the new U.S. law.