IT'S still not clear how the United States and Japan will extricate themselves from their latest trade shootout. On June 28, 100 percent tariffs are due on Japanese luxury cars. Soon thereafter, the confrontation could go before the World Trade Organization (WTO) in Geneva.
No one, least of all the WTO, looks forward to that. The newly formed structure for sorting out trade disagreements has more authority than its forerunner, but a battle between the world's two largest economic powers is a test it would rather avoid.
Japan is counting on a narrow ruling against the punitive tariffs, and it has a strong case. The US may angle for a broader ruling against Japan's nontariff barriers to open trade -- its web of formal and informal regulations and understandings that have long worked against outsiders. A WTO finding in that area could have implications beyond Japan, and could require near-Solomonic wisdom.
There's hope that Tokyo and Washington can resolve their differences through negotiations and avoid both the tariff bombshell and a showdown in Geneva. The parties are poised to begin bilateral talks in Geneva in mid- June, just within the required 30-day period following Japan's filing of a complaint with the WTO.
The benefits of smoother relations between these economic giants far outweigh any satisfaction politicians on both sides may derive from public toughness. Aside from the extensive business and financial ties between the two countries, the US and Japan are partners in maintaining stability in the turbulent post-cold-war world.
Those larger concerns should prevail, leading to an accommodation -- though the politics of the moment work against that. The Japanese, and especially trade negotiator Ryutaro Hashimoto, are in no mood to bow to another American threat. Japan's carmakers face a slow domestic economy and a strong yen, but it's doubtful they will follow Washington's script and push to accept US demands for ''voluntary'' agreements to purchase American auto parts. Mr. Hashimoto's tough stance won't hurt his chances to be Japan's next prime minister.
Bill Clinton's tough stand with Japan won't hurt his chances next year either. And neither he nor the lawmakers on Capitol Hill are greatly worried by protests from car dealers, or buyers, who may soon face a shortage of Infinitis and Lexuses.