Clinton Administration Authorizes Sanctions Against Japan on Cellular Phones

Strategic Insights -

The Clinton administration has decided to impose sanctions against Japan on cellular phones, following the collapse of trade talks between President Bill Clinton and Japanese Prime Minister Morihiro Hosokawa. The move is aimed at increasing pressure on Japan to open its markets to American companies. Clinton warned Japan that it stood to lose the most in a potential trade war, but refused to rule out the possibility of further sanctions. The sanctions could lead to prohibitively high tariffs on Japanese-made cell phones and set the stage for future trade actions.

Key Takeaways:

  • The Clinton administration authorized sanctions against Japan on cellular phones, citing Japan's failure to comply with a 1989 agreement to give Motorola one-third to one-half of its cellular phone business in the Tokyo area.
  • The sanctions could lead to prohibitively high tariffs on Japanese-made cell phones and set the stage for future trade actions.
  • The administration has not ruled out using the punitive trade law known as Super 301, which gives the president broad powers to retaliate against unfair trade practices.
  • The United States is also considering bringing a broad complaint in Geneva against Japanese trade practices under the General Agreement on Tariffs and Trade.
  • Trade Representative Mickey Kantor stated that the United States would take trade actions against Japan "responsibly and carefully," suggesting a barrage of trade sanctions at this time was unlikely.
  • Japan had a $120-billion (U.S.) trade surplus with the rest of the world last year, roughly half of it with the United States.
  • The administration could also order a Justice Department study of anticompetitive practices of Japanese auto companies and give closer scrutiny to tax records of Japanese companies.

Statistics:

  • $120 billion: Japan's trade surplus with the rest of the world last year, roughly half of it with the United States.
  • 5%: The percentage of Motorola's business in the Tokyo area that Japan contravened its agreement with Motorola in 1989.
  • 12-18 months: The expected timeframe for the completion of the sanctions process.
  • 1-2 years: The expected timeframe for the increase of tariffs on Japanese-made cell phones.

Sources:

  • The New York Times, "Clinton Administration Mulls Sanctions Against Japan on Cellular Phones"
  • Associated Press, "Clinton Warns Japan on Trade War"
  • Japan Times, "US Considers Trade Sanctions on Japan"