U.S. may seek separate trade deals with Japan

June 07, 1994|By New York Times News Service

WASHINGTON -- Having learned in the last year that it did not have as much economic leverage over Japan as it thought, the Clinton administration signaled yesterday that it is ready to jettison its all-or-nothing, package-deal approach to a trade agreement with Japan and strike whatever arrangements it can get piece by piece.

The U.S. trade representative, Mickey Kantor, hinted at the change in remarks to reporters yesterday. Since opening trade talks with Japan last July, the administration has been pressing Tokyo for a package deal, known as a "framework," that would consist of agreements for opening five priority markets in Japan: automobiles, auto parts, insurance, medical equipment and telecommunications.

"You have got to be realistic," said Mr. Kantor, speaking in a telephone interview from Paris, where he is participating in a meeting of the Organization for Economic Cooperation and Development. "We can't predict what is going to happen in every area. When you are ready to reach agreement on a particular sector, you should go ahead and finalize that and continue to move forward on the other areas."

While the administration never explicitly ruled out the possibility of accepting deals piece by piece, it has been negotiating them as a package from the start. In February, aides to President Clinton boasted that he could have struck a partial deal with Morihiro Hosokawa, who was Japan's prime minister at the time, covering only some of these areas, but that Mr. Clinton rejected that as insufficient.

Now U.S. trade officials say that in the new negotiations, agreements to open Japanese markets in medical equipment, telecommunications equipment and insurance seem within reach and may be ready for signing at the next summit meeting of the Group of Seven industrial countries, July 8-10 in Naples.

But, the officials said, the two nations remain sharply divided on how to open Japan's automobile and auto parts markets, and this crucial area will probably take much more time to resolve -- if ever. Two-thirds of the United States' $60 billion trade deficit with Japan comes from autos and auto parts.

Nonetheless, to show some progress, the administration is now inclined to close whatever separate deals it can on insurance, telecommunications and medical equipment -- three sectors in which the Japanese government either controls the market or is the biggest purchaser. It would also continue to negotiate for however long it takes on autos and auto parts.

In effect, the administration's posture in the framework negotiations with Japan has gone from "all or nothing" to "take what you can get and deal with the rest later."

With Mr. Clinton and Prime Minister Tsutomo Hata due to meet in Naples in July, the administration appears ready to accept at least a piecemeal deal so that the last year of negotiations will not appear to have been a total waste.

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