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To: Les H who wrote (28789)	10/8/1999 1:09:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

US OFFL: SEES 1999 US-JAPAN AUTO DEFICIT HITTING RECORD $38BLN By Heather Scott WASHINGTON (MktNews) - The U.S.-Japan automotive trade deficit is expected to reach a record of more than $38 billion this year, as the bilateral auto agreement between the two nations has fallen short of its goals, U.S. officials said Friday. Officials from the two nations met this week in Vancouver, Canada, in the fourth annual review of the 1995 auto agreement to assess the progress, and make suggestions for changes to improve implementation. However, "While some progress has been made, the agreement has not fully achieved its objectives," one U.S. official told reporters in a conference call from Vancouver. Despite an increase in sales of U.S. vehicles and auto parts in the early years of the agreement, "sales trends in the last two years have turned negative," and the bilateral deficit could pass a record of $38 billion this year, the official said. "This is very troubling." The bilateral deficit with Japan for parts and vehicles in 1998 was $33.8 billion, up from $31.5 billion in 1997. Observers from Australia, Canada and the European Union participated in the review of the auto accord, during which U.S. officials proposed a number of areas where Japan could improve implementation. While the parties agreed the financial crisis in Asia and Japan's own economic troubles have contributed to the disappointing results of the auto agreement, which was designed to boost sales of foreign made vehicles and parts in Japan, a U.S. official said, "We still believe there is much Japan can do to open its markets." Such measures include deregulation, in areas such as allowing independent auto repair shops and authorizing use of more foreign parts, and measures to enhance competition. A major complaint of U.S. automakers has been that Japanese auto firms put pressure on retail outlets -- through use of financial incentives -- to sell only domestic brands, making it very difficult for foreign firms to compete. While acknowledging Japan has made no specific commitment to implement the U.S. proposals, the official said, "It is fair to say the Japanese government has heard loud and clear. They understand the priority this is for the U.S." The officials said Japan will review the proposals and teams from both countries will continue to meet to discuss them, with one meeting set for next month in Washington, and another in Tokyo shortly thereafter. "We expect them to seriously review the proposals and discuss them with us in coming months," the U.S. official said.