Summit Will Test US-Japan Ties

Tokyo unveils a plan to boost spending on goods from US and others

VERBAL volleys between Japan and the United States have created a tense atmosphere leading up to this Friday's summit between President Clinton and Prime Minister Kiichi Miyazawa.

Mr. Clinton, for instance, offended Japan by telling Russian President Boris Yeltsin that the Japanese do not always mean what they say. And a Japanese official said that US trade official Mickey Kantor is out of touch with reality on trade issues.

Clinton also called the possibility of gaining access to Japan's market "somewhat remote." Tokyo then published a 36-page color brochure in English entitled "Myths vs. Facts" trying to disprove the president's claim.

"All these comments are having a destructive effect on what people think about Japan and the US," says Yukio Okamoto, former head of the North American desk in Japan's Foreign Ministry. "Mr. Miyazawa now has to face off squarely with Mr. Clinton."

Such public sparring, however, will likely be put aside for the meetings in Washington April 16-17. As in past US-Japan summits, the leaders are expected to establish a personal relationship (Miyazawa speaks English) and focus on how to maintain a complex military and political alliance between the world's two largest economies, while playing down trade disputes, at least for now.

Miyazawa says he hopes the summit will "ease tensions," especially because Japan will host the summit of the Group of Seven leading industrialized nations this July.

But with the military alliance seen as less vital than during the days of a Soviet threat, Japanese officials are worried about tough trade talk coming from Clinton and his top aides. US Commerce Secretary Ronald Brown said in a recent speech that the US-Japan relationship must be restructured and that he aims to expand US exports "dramatically."

"Step by step, Clinton is tightening his policy against Japan," says a high-level official in the Japanese Trade Ministry.

Tokyo remains so concerned about any shift toward protectionism or anti-Japanese sentiment in the US that it regularly asks the Gallup organization for public opinion polls. This year's poll indicated that 40 percent of 1,005 US citizens interviewed say that Japan is not dependable mainly because of trade and economic differences.

The figure is down slightly from last year's record of 42 percent. About 31 percent say bilateral ties are in good shape.

As a result of Japan's worries about Clinton's emerging policies, Miyazawa will arrive in Washington loaded with a sleigh-full of "gifts" for his host, a practice deeply entrenched in Japanese culture and one designed to keep harmony.

Japan is expected to propose a set of joint research and development projects with the US in such fields as the environment, energy, transportation, and communications. Perhaps the most unusual "gift" is a $12 million loan by Japan's Export-Import Bank for a Los Angeles coal terminal project.

Perhaps the biggest present for Clinton will be a stimulus package for the Japanese economy designed, in part, to boost imports of foreign goods and to reduce Japan's rising trade surplus with the US. The surplus hit $44.2 billion in 1992, up 17 percent from 1991. "Realistically, we cannot halve our surplus overnight," Foreign Minister Kabun Muto told reporters.

The package, to be unveiled today, is aimed at fulfilling an unkept promise Japan made last year to rev up its economy to 3 percent annual growth. Japanese officials contend that the package will put more than $107 billion in government money into the economy.

Many foreign economists, however, say the "demand-support" money will only generate about two-thirds that much spending. Government spending should be sufficient to ensure real growth of 3 percent or more in fiscal 1993 (starting April 1), says Salomon Brothers economist Robert Feldman. "The package should also convince the United States of Japan's seriousness about economic stimulus...," he says. Many of the new spending projects, such as more computers for classrooms, are expected to be open for forei gn suppliers.

BESIDES the package, Miyazawa will also unveil a dramatic rise in Japan's foreign aid, seen as another effort to recycle the estimated $140 billion trade surplus expected this year.

But Miyazawa is also expected to display a new assertiveness toward the US.

A top Japanese trade official, for instance, was dispatched to Washington last week to warn that Japan will refuse any US initiative to set specific market shares for imported products, as was done with semiconductors.

Japan will also strongly resist US demands to implement a plan made last year during President Bush's ill-fated trip to Tokyo that calls for increased purchases of US car parts.

Miyazawa, according to Asahi newspaper, will ask for an end to the Structural Impediments Initiative talks that began in 1989 and focused mainly on changing Japan's basic economic policies and practices. Instead, Japan will offer a bilateral forum to discuss economic issues.

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