Japan agreed yesterday to make it easier for U.S. supercomputer makers to bid on government contracts there, ending nine months of discussions on the issue but leaving unresolved American complaints about unfair discounting by Japanese supercomputer companies.
U.S. Trade Representative Clayton K. Yeutter and Japanese Ambassador Nobuo Matsunaga exchanged letters outlining new procedures that Yeutter said would give "greater transparency" to what many U.S. manufacturers view as a confusing bidding process that is heavily biased against foreign firms.
Although U.S. manufacturers have long complained about difficulties in obtaining access to Japanese government contracts, the accord does not mention whether inequities exist in the present system.
"As far as the procurement in the public sector, I don't think we had in the past any discrimination ... against foreign products," said Matsunaga. The ambassador said his country asked for no concessions in return for clarifying bidding rules, seeking only to open its markets to outside competition.
"There have been many market-opening announcements by the government of Japan that have not been meaningful," said Yeutter. "We hope this will be." Yeutter emphasized the significance of the Japanese concessions as a precedent for other public sector high-technology markets, and the need to address the Japanese practice of discounting products to create markets.
Officials of the two largest supercomputer makers, Cray Research Inc. and Control Data Corp., said such dumping is a more critical obstacle to competition against Japanese makers than secretive bidding practices for government contracts.
"We've had to compete against some very tough pricing policies," said a spokesman for Cray. The Minneapolis firm, widely regarded as the world leader in supercomputer technology, holds 65 percent of the supercomputer market worldwide, but less than 20 percent of the Japanese market.
Japanese firms have sold supercomputers to the Japanese government and universities in both countries at discounts of up to 80 percent, according to Assistant U.S. Trade Representative Doug Newkirk.
Cray and Control Data "are small companies and they can't afford to compete with megacompanies that lose millions of dollars to gain a foothold in the market," said Gary Holmes, spokesman for the Office of the U.S. Trade Representative.
Yeutter said he is not optimistic that there will be a quick resolution of the dumping issue, saying, "Discussion is still embryonic, so 'soon' is a gross misestimate."
Supercomputers, which cost as much as $20 million each, are capable of handling enormous quantities of data much faster than ordinary computers. Because of their use in weather forecasting, code breaking and satellite imaging, they are considered of strategic importance.
Talks on clarifying procurement procedures became more urgent following reports of a classified State Department cable from U.S. diplomats in Tokyo. The cable quoted remarks made in January by Makoto Kuroda, vice chief of Japan's Ministry of International Trade and Industry, that dominance in the computer industry was part of his country's long-term industrial strategy, and his assertions that U.S. attempts to enter the Japanese supercomputer market were doomed to failure.