The Clinton administration appeared headed last night toward a nasty trade showdown with Japan, after three days of intense negotiations over American access to the Japanese automobile market ended in failure.
The last day of talks in Vancouver, British Columbia, were finished off last night with a terse statement from U.S. Trade Rep. Mickey Kantor.
"The government of Japan has refused to address our most fundamental concerns in all areas," Mr. Kantor said. "Discrimination against foreign manufacturers of autos and auto parts continues."
Administration officials said that a decision to impose trade sanctions that could ultimately cost Japan more than $1 billion might be delayed. But that would only occur if Japan's minister of international trade and industry, Ryutaro Hashimoto, expressed a willingness to engage in deeper talks about establishing a so-called voluntary plan for Japanese automakers buy billions of dollars in auto parts from American companies in coming years.
That seemed unlikely, according to administration officials, who said President Clinton's unusually strong warning on Thursday that his patience was running out should be interpreted as a sign that trade sanctions could be announced early next week.
The National Economic Council, the economic counterpart of the National Security Council, is expected to meet this weekend to forward a final recommendation to Mr. Clinton before he leaves for Moscow on Monday for the celebration of the 50th anniversary of the end of World War II in Europe.
If Mr. Clinton gives the final approval, Mr. Kantor is expected to announce a list of several billion dollars in Japanese-made goods, primarily auto parts, that could be subject to punitive tariffs.
That would set a 30-day clock ticking with the idea of creating a deadline -- and a potential financial crisis for Japanese automakers -- in hopes of forcing an agreement favorable to Washington.
In the interim, American companies would be given a chance to review the list, and seek to eliminate imported items that they heavily depend upon for the production of automobiles and other goods here. The final sanctions list, if it ever goes into effect, would be much smaller than the preliminary list.
Administration officials concede that they have embarked on a risky strategy. Japan has often backed down in past cases when sanctions have been threatened. But the precarious state of the Japanese economy and the troubles facing the auto industry in Japan since the yen soared in value against the dollar give Tokyo much less room to bargain.
Moreover, Japanese officials seem to be betting that the United States does not want to provoke a confrontation that would ruin either next month's summit meeting of the seven leaders of the major industrial powers in Canada, or this summer's anniversary of the end of the war with Japan in 1945.
Both capitals have been working to turn the anniversary into a celebration of the "global partnership" between Japan and the United States.
Currency traders have warned that the dollar could take a further beating if the current talks fail.
In a sign of the tense atmosphere surrounding the talks, Mr. Kantor and Mr. Hashimoto had a testy exchange at a news conference before their final negotiating session.
According to Reuters, when Mr. Kantor noted that foreign car companies accounted for only a tiny fraction of the cars sold in Japan, Mr. Hashimoto interrupted him: "If we start quoting numbers," he said, "that would only please the journalists, so let's stop doing it here, Mr. Kantor."
After a short pause, Mr. Kantor, the U.S. trade chief, replied, "I
am showing the greatest amount of discipline."
