US Takes Japan to the Wire In 'Show Me' Trade Demand

Top officials talk today on resolving car-trade dispute

IN a sumo-like wrestle over their biggest trade standoff ever, the US and Japan have yet to budge on a key US demand: guaranteed foreign penetration of the Japanese car market.

But a countermove by Japan has caught the attention of US officials: a possible promise by Japanese carmakers to "voluntarily" boost their production in the United States, including buying more US parts.

This "carrot" by Japan, however, may not be enough for the Clinton administration to drop its insistence on coming up with objective ways to measure a further opening of the Japanese car and car-parts market.

"There is no reason to go on faith," says US Undersecretary of Commerce for International Trade Jeffrey Garten. "There must be measureable results."

Tonight, the final showdown begins in Geneva between US trade representative Mickey Kantor and his Japanese counterpart, Ryutaro Hashimoto, minister for international trade and industry.

The two men have just over two days before the Wednesday deadline President Clinton set for imposing punitive tariffs worth $5.9 billion on 13 Japanese luxury-car models.

Lower-level talks over the past week made little progress on US demands in three areas:

*Bigger purchases of US car parts by Japan automakers.

*Deregulation of the Japanese car-parts market.

*Better access for American automakers to Japan's dealerships.

If the two nations reach an accord, it could be the single-largest step toward eliminating the US's burgeoning $66 billion trade deficit with Japan. Sales of car and car parts make up more than half of the trade imbalance.

Japan's balking at the US demand for specific targets has left little room for compromise compared to previous US-Japan trade disputes. "The US position is clear: we are firm in our objectives," said Rep. Sander Levin (D) of Michigan, who has been in Geneva meeting with top Clinton administration officials.

Congressman Levin, along with Rep. Amo Houghton (R) of New York, both of whom serve on the House Ways and Means Committee, which has jurisdiction over trade agreements, went to Geneva to "show bipartisan support for the Clinton administration's position."

Japanese officials now believe that their failure to meet Washington's demands will definitely trigger sanctions and not simply lead to another round of talks, Levin says.

Mr. Houghton, a former longtime chief executive of Corning Glass, shares his own bitter memories of having to shut down his company's glass-tube production due to the flood of cheaply produced Japanese televisions in the US and the high tariffs imposed on US television exports to Japan.

In Geneva, the two members of Congress from opposing political parties have been joined by representatives of the nation's Big Three automakers - GM, Chrysler, and Ford - who have also been pacing the halls and offering input.

But opposition to Mr. Clinton's get-tough approach is also brewing back in Washington. On Thursday, conservative, antigovernment, and progressive think tanks joined forces to blast the US attempt to have the Japanese government interfere in the Japanese market to increase its purchases of foreign goods.

AND European leaders, at least in public, have been harsh on the US stand, blaming the Clinton administration for shaking the foundation of the new World Trade Organization. Privately, however, according to US officials, the Europeans have been cheering on the US.

Trade watchers are quick to point out that Europe's car market still remains insulated from a flood of Japanese exports because of strict rules on the domestic content of vehicle production.

According to a top State Department official, Washington's very public rebuke of Japanese trade practices "has forced them to deal with it. Neither side wants a real clash. We'll deal with this so we don't have to go over the cliff together. Once we get autos out of the way, we're well on our way to bridging that gap."

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