In years past, Japan had an official policy of protecting manufacturers of autos, camera film, electronic components and other high-priority products from foreign competition until its own versions were ready to market. By many accounts, that approach helped Japanese companies' rise to positions of world leadership.
That policy has now been officially discarded. But many U.S. trade negotiators and companies believe it lives on behind the scenes, so that a new product from abroad somehow just won't sell in Japan. Once Japanese companies have their own versions, they said, a market magically emerges but local manufacturers dominate it.
Tonight is the deadline for U.S. and Japanese trade negotiators to reach agreement on the latest item in this debate, a high-tech material known as amorphous metal. If they fail, U.S. Trade Representative Carla Hills will begin an investigation that could lead to sanctions.
The talks underline how radically the art of negotiating trade issues with Japan evolved in the 1980s as formal barriers came down, to the point that much of the talk today centers on whether a barrier exists at all. Japan tends to blame poor U.S. sales on lack of effort, misunderstanding of Japan's ways of doing business or low quality. The United States, however, believes that the Japanese government often intervenes unofficially to keep selected American products out.
Developed by Allied-Signal Inc. of Morris Township, N.J., amorphous metals are now being introduced in this country as components in the keg-sized transformers that sit high up on electrical transmission poles. The metals can lower heat loss by 70 percent, the company said, reducing energy consumption.
Allied-Signal says it will sell enough amorphous metals in the United States to make 50,000 transformers. There could be a $100 million annual market in Japan, it says, but to date only a few units have been sold there, for testing.
"The Japanese government organized and led a cartel of Japanese industry whose goal was to develop amorphous metal technology and to thwart our efforts to patent and market our technology in Japan," said Allied-Signal spokesman Michael Ascolese.
This included setting up a joint research program, pressuring Japanese utilities not to buy the Allied-Signal product and delaying a Japanese patent, the company said.
Ed Lincoln, author of the book "Japan's Unequal Trade," says joint research programs often facilitate informal government direction and that in this case companies might have been particularly cooperative. "Traditionally, the electric power companies have been very close to the government," he said.
But Japanese officials say sales haven't happened because, whatever Allied-Signal may say, the technology remains unproven. Japanese power companies field test new equipment for up to five years before making a decision. They say power is more reliable in Japan than the United States and attribute it partly to this conservative view.
Many U.S. power companies, notes Hirofumi Katase of the Ministry of International Trade and Industry, are hanging back too. "There was no conspiracy," he said.