No. 4 — February 2, 1996

Weekly Review


Washington again has given Tokyo the benefit of the doubt on public-sector implementation of a January 1992 arrangement covering government purchases of computer hardware, software and services (see JEI Report No. 4B, February 3, 1995). As well it should, bureaucrats in Japan no doubt would retort. U.S. industry-compiled data, released January 22 by U.S. Trade Representative Mickey Kantor, indicate that the foreign, mainly American, share of the government hardware market climbed to 13.7 percent in 1994 from 8.9 percent in each of the two previous years and 1991's preagreement total of 6.6 percent (see Table). A similar picture of progress under the pact emerges from Japan's own monitoring program. Ministry of Foreign Affairs statistics, disclosed January 31, reveal that competitors won 29.3 percent of the hardware and software contracts awarded in FY 1994 by central government ministries, agencies and affiliated laboratories, research organizations and educational institutions. This cut of the business contrasted with a share of 27.9 percent the prior fiscal year, 18.9 percent in the April 1992-March 1993 period and just 8.8 percent in FY 1991.

The Clinton administration's "yes, but " take on the third-year results of the government computer procurement pact had several angles. In a statement announcing the 1994 figures Mr. Kantor gave Tokyo credit for the expansion in foreign sourcing at the national government level and in the public sector as a whole. At the same time he cited as troubling the big drop in the foreign share of the quasi-government market since the organizations forming this segment — the source of 35 percent of publicly funded computer purchases in the White House's accounting — were on a buying binge during the reporting period. The 13 U.S. industry leaders that participate in the Computer Systems Policy Project, the prime mover behind the 1992 agreement, offered the same critique. The group noted that the national government, which represents an administration-derived 37 percent of the public-sector computer market, slashed its hardware budget in 1994, while local government units collectively trimmed theirs as well. For Washington and CSPP alike, though, the bottom line on the public sector's 1994 computer procurement performance was determined by a straightforward comparison between the foreign share of the overall government hardware market — 13.7 percent — and the position offshore suppliers had achieved in the many times larger Japanese corporate market — 37 percent, according to the administration's numbers.

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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