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TRADE DEFICIT CLIMBS. US plans to ask Japan to follow a trade schedule

By Ron SchererStaff writer of The Christian Science Monitor / April 15, 1987



Washington

The United States is calling on Japan to establish an ``implementation timetable'' to reduce trade frictions and ease the large trade imbalances between the two countries. US Trade Representative Clayton Yeutter, in a breakfast meeting yesterday, said he will request such a schedule when he meets with Japanese trade officials and Prime Minister Yasuhiro Nakasone in Tokyo next week. Ambassador Yeutter believes the failure of the Japanese to follow through on past agreements has resulted in skepticism in marketplaces, including the foreign exchange market where the yen has continued to appreciate, despite Japanese attempts to halt its rise.

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Yeutter says his Tokyo agenda will include getting commitments to include US firms in the construction of the $8 billion Kansai airport project, which is being built near Osaka, the purchase of supercomputers by the Japanese government, and the inclusion of US companies in the management of a fiber optic communications link between Japan and Alaska. In addition, Yeutter will ask the Japanese to buy such agricultural goods as rice, wheat, beef, and citrus. ``We would like them to pass on the benefits of a stronger currency,'' he says.

Yeutter's comments came the day the Commerce Department reported that the nation's trade deficit in February widened to $15.1 billion, up from a revised $12.3 billion in January. The US trade gulf with Japan increased to $5.1 billion, from $4.3 billion in January. Preliminary trade numbers are often revised sharply, but they indicate trends.

The trade deficit numbers were viewed negatively by the markets on Tuesday. Many analysts had expected the trade gap to narrow. In Europe the dollar dropped within half an hour of the news to a 40-year low of 140.60 yen. At the same time, the US stock and bond markets, which fell Monday, continued to drop Tuesday. By late morning the Dow Jones industrials were down 16.76 points.

Yeutter maintained that the trade picture would begin to turn around this year with an improvement of between $15 billion and $20 billion over last year's $170 billion trade deficit. ``It takes a long time for exchange rate movement to be reflected in trading patterns,'' explained Yeutter, noting, ``our trading partners protect their market share ferociously.''

In a controversial move, the administration recently said it would slap tariffs on Japanese products because of the dumping of Japanese semiconductors in third markets, such as Hong Kong and Korea. On Monday and Tuesday the administration heard comments from importers who asked that the $300 million in tariffs not be placed on their goods.

Yeutter said the tariffs might remain for only a short period of time, but it would take ``the persuasiveness of data'' to show that Japan had stopped dumping to result in their removal. In Tokyo a Japanese trade official warned that Japan may counter with tariffs on US products if the US implements sanctions.