Members of Japanese industry and the U.S. government made efforts yesterday to reduce tension over the growing U.S. trade deficit with Japan.
Hitachi Ltd. and Sanyo Electric Co. pledged to invest more capital in the United States, while two members of Congress introduced a trade bill aimed at solving trade imbalances.
Hitachi Ltd. said it will channel an additional $400 million into the United States by spending $120 million on American products, setting up three factories here and funding a Hitachi foundation for research with an endowment of $20 million. According to Toshi Kitamura, the executive managing director and group executive of the international operations group of Hitachi Ltd., the threefold program "will collectively accomplish our twin goals of strengthening and expanding our relationship with the U.S. and helping to resolve the present trade frictions between our two countries."
Kitamura, who noted that Hitachi purchased $260 million worth of goods from the U.S. last year, said that company will spend $120 million more in the next 18 months for U.S. goods, including production facilities and equipment, research and development equipment, and more long-term purchase contracts on semiconductors as well as long-term purchase contracts on communications equipment.
In addition, Hitachi has purchased a semiconductor wafer factory in Irving, Tex., for $40 million and an automotive electronic parts plant in Harrodsburg, Ky., for $4 million. Kitamura said that Hitachi is still negotiating for a third plant.
Hitachi, which earned $841 million in its fiscal year ended March 31, currently employs 3,655 people in the United States. Hitachi employs 165,000 workers worldwide.
Noting that "understanding of Japan and her culture is far too limited," Kitamura said that the Hitachi Foundation will provide "scientific, education, and charitable support for research facilities and individual professors and students."
"The words sound good," said George Scalise, chairman of the Semiconductor Industry Association's public policy committee and a senior vice president at Advanced Micro Devices. "The question is -- will that translate to an improvement in our market penetration?"
U.S. companies that have the bulk of their business in the sale of semiconductors have complained bitterly that Japan simultaneously shuts the U.S. companies out of its market and competes unfairly in the United States by selling microchips below cost. Scalise said that Hitachi's commitment to buy an additional $120 million worth of U.S.-made goods and services may not help the trade balance if the semiconductor market expands quickly.
Sanyo announced yesterday that it will manufacture video tape recorders in the United States, joining Matsushita Electric Industrial Co., which announced a similar decision earlier in July. Details of the plant were not released. Sanyo produces 4 million VCRs annually.
Rep. Timothy E. Wirth (D-Colo.), chairman of the House subcommittee on telecommunications, consumer protection and finance, and Rep. James Florio (D-N.J.), chairman of the House subcommittee on commerce, transportation and tourism, introduced a trade bill that they said is aimed at opening up foreign markets to U.S. telecommunications goods and services through negotiation. Cosponsored by 21 other congressmen, the bill has bipartisan and industry support and does not specifically target Japan.
Under provisions of the bill, the secretary of Commerce would be required to identify foreign countries that deny the United States the same access to its market that the foreign country enjoys in the United States. If a country were denying access to U.S. products, the president could then remedy the problem under existing trade law or turn to the Federal Communications Commission. That agency would be empowered under the legislation to impose sanctions, although specific sanctions are yet to be determined.
"This bill rejects a protectionist approach," said Wirth. "This moderate legislation is pro-active -- not reactive -- intended and designed to open foreign markets through negotiations -- not to close ours," he said. Other bills have taken a more protectionist tack in an effort to balance the trade deficit with Japan, he said.
The legislation is aimed at narrowing the more than $700 million telecommunications trade deficit run up in 1984 -- a deficit that is expected to double this year. The U.S. Commerce Department announced Tuesday that the U.S. trade deficit with Japan in June was a record $4.57 billion.
U.S. semiconductor manufacturers complain that they are unable to capture more than about 11 percent of the Japanese market, although Japanese officials claim that the U.S. share is actually closer to 19 percent of its $8 billion market. According to the SIA, Japan holds 14 percent of the U.S. market in semiconductors, which was $11.6 billion last year.