Japan refused yesterday to open its major government-funded public works projects to foreign construction and engineering companies, backing away from a commitment that outgoing Prime Minister Yasuhiro Nakasone made to President Reagan last month, administration officials said.
A negotiating team headed by Deputy Undersecretary of Commerce J. Michael Farren expects to leave Tokyo today without an agreement on the prickly construction issue that the negotiators believed was within their grasp, Commerce spokeswoman Desiree Tucker said. She added that there is the possibility of further talks in Washington next week.
Sources close to the talks said a major sticking point developed when Japan backed off the Nakasone pledge that any agreement on foreign participation in the $8 million Kansai International Airport project serve as a model for all public works projects, which are expected to total $62 billion over the next 10 years.
The construction issue is emerging as a major irritant in U.S.-Japanese trade relations, largely because of the political clout of Japan's powerful construction industry. U.S. officials fear it will be harder to reach an agreement after Noboru Takeshita takes over as prime minister next month, since he is known to have close ties to the construction industry.
To give added weight to the U.S. negotiators' position on this issue, the Senate has approved amendments to five bills since May to keep Japanese construction companies from winning federally funded contracts as long as their U.S. competitors are barred from major projects in Japan.
The most recent action came Thursday, when the Senate voted to keep foreign design, engineering, construction and architectural firms from participating in projects funded under the $11.1 billion transportation bill unless their countries allow foreign firms to take part in their public works programs. That bill contains funds to extend Metro's Red Line to Wheaton.
Sen. Frank Murkowski (R-Alaska), who has sponsored all five provisions in Senate bills, said contracts worth more than $2 billion have been awarded for the Kansai Airport so far and only $2.2 million of the work has gone to U.S. firms. Since 1965, he added, no U.S. firm has won a major contract in Japan.
Meanwhile, Japanese construction companies have become major players in the United States, gaining $2.2 billion in contracts last year.
In addition, they have won multimillion-dollar contracts funded with federal money in the United States and on military bases in the South Pacific, including a $19.5 million contract for twin tunnels at the Wheaton Metro station and a major contract for the Los Angeles subway system. Major military contracts include a $45.5 million geothermal power plant at China Lake Naval Weapons Center in California and $23.3 million in contracts for military facilities in Guam.