DATE: Saturday, October 18, 1997            TAG: 9710180344

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER 

                                            LENGTH:   85 lines

U.S. SUSPENDS BAN OF JAPANESE SHIPS JUST IN TIME, NEGOTIATIONS STALL FEDERAL ORDER.

The United States won't be seizing or banning any Japanese cargo ships for now.

Just hours before the threatened ban was to take effect, U.S. and Japanese negotiators announced that they had reached an agreement in principle that would resolve a long-simmering dispute over port access in Japan.

Undersecretary of State Stuart Eizenstat, who stepped in to lead the U.S. negotiating team on Friday, characterized the deal as a ``breakthrough which we hope will lead to meaningful reform of these restrictive, costly and prohibitive port practices.''

The breakthrough prompted the Federal Maritime Commission to suspend its order that would have banned the ships of three Japanese cargo lines from U.S ports and seized the ships of those lines that are in port.

The order was to have taken taken effect at midnight Friday. The four-member commission is meeting Monday to review the specifics of the agreement.

That's welcome news to local officials of NYK Line. The line's container ship Cape Charles sailed into the port of Hampton Roads late Friday to unload and load cargo at Norfolk International Terminals. If the ban had taken effect at midnight as expected, the Cape Charles could have been seized.

``It's definitely a relief,'' said Jim Michalski, NYK Line's manager of Mid-Atlantic operations. ``We move a lot of freight through here, and we've had a lot of concerned inquiries in the past few days.''

NYK had decided to proceed with uninterrupted service on the expectation that the issue would be resolved, Michalski said.

Port officials also welcomed the breakthrough. The three Japanese cargo lines move about 40,000 containers of cargo through the port of Hampton Roads every year, which is about 5 percent of the port's annual general cargo volume.

``It seemed to me that it was a real shame to punish these three lines when it really was a trade dispute between the two countries,'' said J. Robert Bray, executive director of the Virginia Port Authority. ``I'm greatly relieved that the matter is hopefully being resolved.''

The ban and seizure order was approved Thursday by the Federal Maritime Commission after the Japanese lines - NYK Line, Mitsui O.S.K. Line and ``K'' Line - failed to pay $4 million in fines due Wednesday. The commission delayed asking the Coast Guard to execute the order until midnight Friday to give the negotiators a chance to settle the matter.

The commission had imposed fines of $100,000-per-voyage on the three lines Sept. 4 after Japanese officials failed to live up to commitments to liberalize port practices.

U.S. shipping lines have long complained about restrictive port practices in Japan, including the inability to own and operate their own terminals or even hire the company of their choice to unload their ships. The practices put U.S. lines at a competitive disadvantage to Japanese lines in Japan.

A ban on Japanese container ships would have affected billions of dollars worth of products just as American retailers were trying to get ready for the holiday season.

Negotiators now expect to firm up details of the agreement in a few days.

``While an agreement is not yet in hand, it is clearly within reach,'' said Undersecretary of State Eizenstat. ``We hope and expect that can be done very shortly'' - perhaps by the end of the weekend.

Japanese Ambassador Kunihiko Saito said, ``I think we have succeeded in resolving most of our outstanding problems. There are still a few details to be worked out.''

Friday's announcement came after a morning of high-level talks between officials from both countries eager to avert a disruption of billions of dollars in trade between the world's two largest economies.

Eizenstat said he believed the tentative deal could lead to ``meaningful reform'' in Japanese port practices.

Under the agreement, the Japanese agreed to create an alternative system for U.S. and other foreign carriers to negotiate for stevedores to unload their ships.

This had been a key demand of U.S. shippers, who wanted the Japanese government to rein in the Japan Harbor Transportation Association, an association of stevedoring companies that American shippers complained greatly limited access to Japanese ports and drove up costs for unloading products. MEMO: Bloomberg Business News and The Associated Press contributed to

this story. ILLUSTRATION: Photo

L. TODD SPENCER

Had the ban taken effect at midnight Friday, the Japanese NYK Line's

container ship Cape Charles, right, could have been seized.

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