The historic deal that cooled a bitter dispute over U.S. access to Japan's auto markets will not immediately cut the trade deficit, make Japanese buyers choose Chevys or create thousands of American jobs.
But Wednesday's agreement in Geneva helps create a climate that might lead to those things. It also grants an immediate reprieve to hundreds of U.S. foreign car dealers who would have faced tariffs making their products nearly unsellable."We breathed a sigh of relief," said Hank Bottieri, sales manager at Lexus of Albany, N.Y. "With the two biggest economies in the world about to enter a trade war, it's pretty scary."
Both sides claimed victory - the Americans for making it easier to penetrate Japan's auto market, the Japanese for refusing to agree to quotas for how many U.S. cars or parts will end up in their country.
The chief executives of America's Big Three automakers - General Motors, Ford and Chrysler - all praised the settlement.
The United States had threatened to slap 100 percent tariffs on 13 Japanese luxury car models, starting at midnight Wednesday, unless Japan took action to open its markets to American cars and parts. The pact that culminated two years of negotiations came hours before the deadline.
"We all went from pessimism to the agreement without stopping at optimism," said U.S. Trade Representative Mickey Kantor.
The Japanese government said it would begin relaxing the complex regulations that make it costly or impossible for U.S. companies to sell replacement auto parts in that country.
Japan and its auto manufacturers pledged to encourage Japanese auto dealers to sell U.S.-made vehicles. And Japanese carmakers outlined plans for buying more American-made parts and building more cars and parts in this country.
"After 20 years, we finally have an agreement that will move cars and parts both ways between the United States and Japan," President Clinton proclaimed in Washington.
At the heart of the dispute was the U.S. trade deficit with Japan, which reached $66 billion last year, more than half in the automotive sector.
Instead of Japan agreeing to government-set quotas, top Japanese car companies offered "voluntary" plans to boost purchases of foreign cars and parts.
"With regard to numerical targets, the Japanese stance, that this is outside the scope of the government, is maintained and we are able to maintain the principles of free trade and economy," said Japanese Trade Minister Ryutaro Hash-i-moto.
That lack of goals or quotas prompted one of the lukewarm assessments of the agreement, from Sen. Carl Levin, D-Mich.
He applauded the agreement on replacement parts as "real progress" but said the progress "is less clear" on the issues of dealerships and purchases of parts for new automobiles.
The major Japanese carmakers did announce plans to increase production and investment in the United States and use more U.S. spare parts in vehicles assembled in Japan - both key U.S. de-mands.
U.S. officials say that will translate to Japanese companies making an additional 550,000 vehicles a year in the United States by 1998, along with a corresponding increase in buying American parts for those cars. Japanese carmakers will also buy an additional $6 billion in U.S. parts to ship to Japan by that year.
The Clinton administration "has pushed the Japanese further than they have been pushed before," said David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation.
But Cole is not ready to say the agreement has opened Japan's traditionally closed market.
"We'll determine that by what we can measure down the road here six months, a year, a year and a half," he said.
Ford Motor Co. Chairman Alex Trotman said the deal "forms the basis for progress" and that it should help Ford find more customers in Japan.
But, he added, "This agreement is not a magic potion and it must not be allowed to obscure the fundamental issue: Japan needs to move much faster in deregulating its economy and addressing its huge trade imbalances."