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Verity Tells Japan Its Practices Wreck Foreign Industries

November 19, 1987

TOKYO (AP) _ U.S. Commerce Secretary C. William Verity told Japanese officials Thursday that their aggressive export strategies are wrecking foreign industries, a Commerce Department spokeswoman said.

Verity told Prime Minister Noboru Takeshita that Japan must refrain from its ″tendency to organize researchers to go after a key market by using government, industry and the banking system together to create an absolute domination of a foreign domestic market,″ said spokeswoman Desiree Tucker.

″This is not the way to seek export markets,″ she quoted him as saying.

Ms. Tucker said Verity added that the consequence of such trading practices was the destruction of domestic industries abroad.

She said Verity stressed that Japan should assume more responsibility and work with the United States ″toward mutual leadership in the world.″

In meetings with Japanese government and business leaders, Verity also expressed ″concern that Japanese people and the government in particular have lost credibility,″ Ms. Tucker said.

″The perception now is that the Japanese government says it will open up a particular market segment and then delays and delays without taking action,″ she quoted him as saying. He said it was ″important that the Japanese rectify this perception problem,″ the spokeswoman added.

Verity, who arrived Wednesday for his first overseas visit since being sworn in on Oct. 19 as commerce secretary, also met separately with International Trade and Industry Minister Hajime Tamura, Foreign Minister Sosuke Uno and a group of business leaders.

His visit comes at a time of renewed tension in U.S.-Japan trade relations following the Commerce Department’s ruling that Japanese companies are dumping, or selling below fair market value, color television sets in the United States.

Ms. Tucker said the main purpose of Verity’s four-day trip was ″to bring a broad message,″ rather than to discuss specific trade issues, and to ″set the stage for a new and constructive approach to trade.″

Last year, the U.S deficit in trade with Japan reached a record $58.6 billion, according to U.S. figures. Verity has called Japan’s trade surplus with the United States ″unsustainable.″

Ms. Tucker said Verity told Takeshita and others that U.S.-Japan relations were ″outstanding, except for one bad apple - trade.″

Asked by businessmen what area of trade he would most like to see improved, Verity said: ″No dumping, export prices that reflect exchange market values and an end to absolute market dominance,″ Ms. Tucker reported.

On Tuesday, Verity told reporters in Washington that Japan risks imposition of U.S. retaliatory duties for failing to price its products in line with the yen’s appreciation against the dollar.

Ms. Tucker described Wednesday’s meetings as ″positive and constructive.″

However, after Verity’s meeting with Uno, Yoshifumi Matsuda, the Foreign Ministry’s senior spokesman, told reporters, ″We tried to submit our thoughts and policies, but in spite of our efforts ... they are not persuaded, they are not satisfied. Certainly they don’t give up.″

One sticking point, Matsuda said, was the U.S. demand that American firms be accorded equal footing in bidding on contracts for Japanese public works projects.

Uno told Verity that ″we cannot treat these public works in the same manner as we offered for the private businesses ... because ... public works are different depending on the practice, traditions and some other social elements of the respective countries,″ Matsuda said.

The construction business involves ″not only mechanical construction ... (but also) some labor problems, particularly immigration or desirability or related matters of foreign laborers, or many other social implications,″ Matsuda added.

″Because of this very difficult nature of the construction business, I think that some countries are quite open to foreign participation, and some are not,″ he said.

″In other words, there is no international rule as to public works by the government, so Japan considers it necessary this time to think about possibly establishing an international rule,″ Matsuda said.

He said Verity requested that Japan and the United States discuss the issue bilaterally before approaching an ″international forum.″

Matsuda said that last year ″five American companies entered into contracts amounting to 4.6 billion yen (about $34 million) for public works projects by the central government and local governments.″

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