No. 6 — February 11, 2000


Weekly Review


Progress was elusive in the early phases of both the 1997-98 and the 1998-99 round of talks under the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy — the forum the White House devised for capitalizing on Tokyo's stated commitment to deregulation and structural reform to promote changes in conditions of competition of particular interest to American businesses. If anything, the going is even slower in the final cycle.

Experts from the two governments convened in mid-November and on one or more subsequent occasions with a mandate to draft specific market-opening steps in each of the Enhanced Initiative's six areas: telecommunications, housing, medical devices and pharmaceuticals, financial services, energy and the basket category of government practices and competition policy (see JEI Report No. 18B, May 7, 1999). For all the usual political and bureaucratic reasons, the Clinton administration teams found it virtually impossible during these sessions to persuade their counterparts to address the ideas, recycled as well as new, included in the 45-page deregulation proposal that Washington had submitted to Tokyo early last October.

Deputy U.S. Trade Representative Richard Fisher was no more successful at ending the standstill when he met Deputy Foreign Minister Yoshiji Nogami February 2 in Washington. On paper, the two senior negotiators were supposed to review the results of the work of all six expert panels and offer compromises to break deadlocks. However, because of the priority that U.S. trade policymakers have given to deep and quick cuts in the fees that Nippon Telegraph and Telephone Corp.'s two regional operating units charge rival communications carriers to connect with their networks, the Fisher-Nogami meeting became in effect an extension of the working-level talks held on this subject in mid-January (see JEI Report No. 4B, January 28, 2000). The high-level input notwithstanding, neither side budged from its earlier position.

Short of the Clinton administration backing down, the impasse over NTT interconnection rates puts at risk completion of the third Enhanced Initiative status report by the target date of March 31, which also is when Tokyo will unveil its latest package of economywide deregulation measures. Missing this deadline would not be politically damaging to transpacific relations since both sides know that the report's real due date is anytime before President Clinton meets Prime Minister Keizo Obuchi on the sidelines of the late July summit on Okinawa of the leaders of the Group of Eight nations. In the interim, though, the stalemate threatens to impede progress toward additional regulatory and structural reforms that Washington deems important to the success of U.S. companies doing business in Japan, whether elsewhere in the telecommunications field or in the five other Enhanced Initiative areas.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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