All sides hail trade pact
The settlement was reached July 28, a few hours before the deadline.
Lobbyists, trade officials and analysts in the United States said all parties were satisfied because all came away with the jewels they sought. Or, at least, the hope for them seemed more realistic. ...
Some analysts suggested that the United States had backed down because it did not win the numerical targets it had sought for reduction of the trade deficit. But the agreement clears a path for U.S. cars and parts in Japan.
The Japanese sidestepped the 100 percent tariff on luxury cars. Japanese pundits suggested that Japan had dodged a bullet while giving away little.
Avoiding a war is good, be it a trade war, a war of words or a shooting war. In this case, a trade confrontation between the world's two greatest economic powers was not going to do anyone any good. Obviously, leaders at both ends of the Pacific decided, 'Let's settle this thing before someone gets hurt.' And they did.
Who won? Nobody, although each side came away with enough for bragging rights at home.
The Japanese escaped the crushing 100 percent tariff on luxury cars. It preserved a market that was worth 260,000 vehicles and $8 billion to $10 billion in 1999 sales. The tariff would have been assessed on landed value, not sticker prices. Even so, it would have been about $30,000 on a 1995 Lexus GS 300 sedan, which had a $43,600 sticker.
The Americans got a foot a little further inside the Japanese door. While the Japanese would not accept a dollar target, it was estimated Japanese purchases of American parts and materials would increase from $19 billion in the year ended March 31, 1995, to $28 billion in 1998.
The fiscal 1998 purchases amounted to $25 billion , a bit less than hoped for, but 32 percent higher than in 1995. The purchases were from companies that manufacture in the United States. They were not necessarily from American companies.