Given how difficult it was to secure it in the first place, and the fact that C&W wants to enhance its position, not diminish it, the company is right to feel aggrieved and to ramp the issue up into a fully- fledged trade dispute.
Lord Sharpe, a former chairman of C&W, had to fight long and hard to be allowed to participate in Japan's telecommunications market. Eventually he was allowed in as part of a consortium licensed to compete as an international telecoms carrier. That business has perhaps never quite lived up to its early promise, but at least it is something, and as part of the company's international strategy C&W now wants to take full control of the operation, buying out other partners who are keen to sell.
The problem is that Japan's dominant domestic carrier, NTT, also wants to buy. The management and other partners seem more inclined to sell to NTT than C&W. Furthermore, other partners, including the car manufacturer Toyota, may not be prepared to honour pre-emption rights entitling C&W to full control.
To most Westerners, this already begins to look like an all-too- familiar Japanese stitch-up, but it gets worse. C&W has indicated that it is determined to remain in as a minority shareholder even if others sell to NTT. Unfortunately for C&W, new laws designed to ease much-needed corporate restructuring in Japan would allow NTT to "squeeze out" the troublesome minority through compulsory purchase of its shares.
C&W is thus hit by a double whammy. First its pre-emption rights, allowing it to up its stake in Japanese telecoms, are ignored, then it is forced out altogether. This is a terrible state of affairs, and it might reasonably be said that it could only happen in Japan. Technically speaking, this is not a trade issue, since it is not about the import and export of goods, but it falls into a similar bracket.
What this is about is the use of local laws, customs and prejudicial practice to exclude a foreign company from Japan's domestic market, and it is powerful backing for the contention that nothing has really changed in Japan, despite all the talk of structural reform and a new economic dawn.
It is often said that the US's burgeoning trade deficit now stands out as the biggest single threat to the future health of the world economy. The cause of this deficit, however, is not confined to the differing economic performance of the US and the rest of the world. It is as much about barriers to trade, protectionism and unfair practice as anything else. In this department, Japan continues to be a major offender.Reuse content