TOKYO THREATENS TO DOWN BILATERAL TALKS

TOKYO THREATENS TO DOWN BILATERAL TALKS

Japan and the United States seem headed for a showdown.

Bilateral talks between the two nations have been bitter before, but Tokyo seems ready now to take a stand on issues that have troubled it for years and, for the first time, to renounce its air treaty unless Washington yields.This dispute has been 41 years in the making. It stems from provisions in the first U.S.-Japan bilateral agreement, signed in 1952. That was the year Japan's peace treaty took effect, formally ending World War II and seven years of Allied occupation under Supreme Commander Douglas MacArthur. "Made in Japan" still meant cheap, shoddy goods and Japan's airlines only owned two turboprops.

Pit Stop

U.S. carriers needed to refuel in Tokyo before continuing their flights on to Seoul, Hong Kong and other Asian cities. Japan gave them permission, but in a related clause that has become the center of today's dispute, Japan also consented to so-called fifth-freedom rights - the right by U.S. airlines to carry local traffic between Japan and those onward destinations. This was during the Korean War and Japan served as a way station and refueling stop.

At the time, when U.S. travelers dominated air traffic and Japan had little capability to handle it, this concession did not loom large. But today Japan sees the fifth-freedom rights of Northwest Airlines and United Airlines, successor to Pan American World Airways in the Pacific, as a cause of their own carriers' woes, symbolizing an unequal agreement and an affront to their sovereignty.

Northwest and United now fly from Tokyo and Osaka to 10 Asian cities, carrying as much as 20 percent of all passengers on some high-density routes. A third of their slots at crowded New Tokyo International Airport at Narita are devoted to fifth-freedom flights, even though most no longer need to refuel in Japan to reach other Asian cities.

To be sure, Japan has some of the same gripes as other nations about excess U.S. capacity and low yields on routes between the United States and Japan, but it is the U.S. routes beyond Japan to such cities as Bangkok and Singapore that threaten to end the current bilateral agreement.

Grit and Determination

The level of Tokyo's determination became evident earlier this year when it refused to permit United to launch new flights from Tokyo to Sydney unless the carrier agreed to limit its fifth-freedom traffic on those flights to no more than 50 percent. United refused on the grounds that the air treaty contained no such limit and Japan has no right to impose one unilaterally.

The Department of Transportation agreed and was ready to slap sanctions on Japan's carriers until it realized that escalating sanctions and counter- sanctions could hurt U.S. airlines more than the Japanese.

Tokyo's position was and is that it will not allow any new U.S. routes beyond Tokyo without a 50 percent lid on fifth-freedom traffic. It is unclear how far Japan is willing to go to impose that lid on existing routes, but there is little doubt about its resolve to require it on new ones. Moreover, Tokyo appears adamant about its right to impose the cap before flights start, rather than waiting to see how traffic develops on a new route.

The first round of talks on a revised agreement ended coolly in August when Japan warned U.S. negotiators that renunciation of the treaty was a definite possibility. Japan has a strong position because its carriers, for the first time since it started raising the fifth-freedom issue in the 1970s, do not seek any additional U.S. routes or capacity.

As a result, the United States brings nothing to the table to interest Japan except the possibility of concessions. Conversely, U.S. airlines are eager for new routes to Osaka's Kansai International Airport, slated to open in September. So the two sides are far apart in even agreeing on what to negotiate.

Supporters

Unlike prior U.S.-Japan bilateral disputes, this time Tokyo has support from much of Asia. The Orient Airlines Association has called on carriers throughout Asia to oppose U.S. fifth-freedom flights beyond Japan

because of their impact on other regional airlines.

Some U.S. retreat on the fifth-freedom issue seems likely. Washington already may have signaled its willingness by agreeing to an interim 50 percent fifth-freedom lid in a similar dispute with Australia. Cutbacks within Asia will pinch Northwest and United, which depend on those routes.