U.S. trade 'hit-list' focuses on Japan

April 01, 1994|By New York Times News Service Bloomberg Business News contributed to this article.

WASHINGTON -- The U.S. government released its list yesterday of countries erecting egregious trade barriers, singling out Japan as the worst offender. But senior officials said they were not, for the moment, contemplating any new sanctions against Tokyo.

The Clinton administration has decided to give the Japanese more time to flesh out their sketchy offer, made earlier this week, to break the trade deadlock.

This restrained response by the administration to a Japanese trade package deemed wholly insufficient is in striking contrast to some of the tough language of recent months.

It is a direction that comes straight from the White House, officials say, and reflects concern about destabilizing world markets as well as a need to enlist Japan's support to deal with North Korea and China.

In economic terms, President Clinton has decided that there is just enough in the Japanese offer for him to feel that Prime Minister Morihiro Hosokawa is making a good-faith effort to reform the Japanese system, the administration officials say.

The Hosokawa package says that Japan would spend the next three months devising steps to eliminate red tape in 11 areas where foreign companies believe they are systematically being frozen out of the Japanese market, but Japan would not decide until June on specifically how to loosen government regulations or increase spending.

While the Mr. Hosokawa offer falls well short of what the United States wants, the White House believes that it is worth giving the

prime minister time -- no one will say how long -- to see if he can come through with the substantive details it is demanding. If he fails, the administration will opt for more sanctions, officials say.

In Tokyo this morning, Japanese Finance Minister Hirohisa Fujii showed little concern about the U.S. government report on trade barriers.

Speaking to reporters at a regularly scheduled news conference, Mr. Fujii said the release of the report wasn't viewed in Japan as a sign that economic sanctions are imminent.

"We are currently doing what we can to voluntarily open our markets to imports," Mr. Fujii said.

In the meantime, U.S. officials say that the marketplace is already exerting intense pressure on Tokyo, by driving up the value of the yen.

Since the Hosokawa offer was deemed "a work in progress" by the Clinton administration, currency speculators have bid up the yen, assuming that the United States would drive it up sometime later.

When the value of the yen rises, it makes Japanese exports more expensive and results in Japanese businesses losing market share. It has the effect of a tariff imposed on everything Japan sells abroad, which is worse than any formal sanction the Clinton administration could devise.

Nearly 40 other countries and trading blocs were also criticized for their trade practices, with China severely chastised as failing to clamp down on the piracy of U.S. videos, software and compact disks.

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