Japanese move to head off US retaliation over chips. They see need for `cool heads' in dealing with trade friction

Japan will seek emergency talks with the United States to head off retaliatory trade sanctions announced last week, government officials here say. ``We cannot just wait and see,'' an official of the Ministry of International Trade and Industry (MITI) said. The US will make the final decision to impose $300 million in tariffs on Japanese electronic products on April 17. Japanese negotiators plan to go to Washington by early next week.

The Japanese are eager to head off what is viewed by many as an ``emotional'' US decision. The US action was taken in response to what Washington sees as Japan's failure to live up to an agreement reached last July on semiconductors, the memory ``chips'' for computers and other electronic products.

``Semiconductor friction is a deep-rooted problem, and the entire Japan-US relationship will suffer if it is not handled properly,'' the Yomiuri Shimbun, Japan's largest circulation daily said in a weekend editorial. ``Both countries should handle the problem with cool heads.''

Government and industry, however, continue to insist that they have been faithful to the semiconductor pact. ``We have already taken every possible measure,'' the MITI official insisted. Last week, MITI announced cuts in semiconductor production, a measure aimed at forcing up domestic prices and drying up the flow of cheap chips that Americans say is undercutting the agreement.

``The problem is timing,'' the official claims, ``when the results of the measures we have taken will become more or less perceivable.'' If the US side would only ``have patience,'' he says, ``this unnecessary friction between the two countries wouldn't have been created.''

``The agreement itself was unenforceable from the beginning,'' a senior economic policymaker believes, pointing to the difficulty of controlling sales of chips to third countries. MITI has been successful in monitoring the price of Japanese chips exported directly to the US, but less so to other nations such as Singapore from where the chips have slipped into the US. One new measure, he suggested, will be joint monitoring by both countries.

The Japanese approach, the official proposed, should be to focus more on the broader context of US-Japan economic relations than on the semiconductor issue. That ``focal point is much too political.''

The key is likely to be Prime Minister Yasuhiro Nakasone's visit to the US at the end of this month. In order to calm trade tensions, it is reported, Mr. Nakasone will announce a new package of domestic economic expansion measures and steps to open key industrial markets to reduce the trade bulge.

The package, now under discussion within the government, will probably include more public works spending and a supplementary budget for the fall. Nakasone, observers here expect, will offer concessions on other trade disputes, particularly US demands for greater access for US supercomputers, international telecommunications equipment, car telephones, and the construction industry.

Japanese newspapers reported Sunday that Japan plans to buy several US supercomputers. In Washington, government officials say they have had no official word from the Japanese on the supercomputer purchases. But US officials agree the semiconductor and supercomputer issues are not linked.

``You can't solve the semiconductor case with supercomputers,'' says Roger Bolton, a spokesman for the US trade representative. ``We must have the semiconductor pact lived up to.''

Nakasone's efforts, the senior official worries, could be meaningless if the expansion measures are not ``taken boldly.'' The fiscal conservative stance of the Nakasone administration has blocked, up till now, such growth in government spending. Nakasone's political troubles, he feels, may weaken his ability to change that stance.

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