Japan bends in trade showdown

June 28, 1995|By New York Times News Service

GENEVA -- As U.S. sanctions loomed against Japanese luxury cars, Japan's trade minister showed new willingness to expand foreign access to the Japanese automotive market, U.S. officials said early this morning. But it was not clear whether Tokyo would offer enough to persuade President Clinton to call off the tariffs set to go into effect late tonight in the United States.

The sudden flexibility by the Japanese minister of international trade and industry, Ryutaro Hashimoto, clearly took U.S. officials by surprise. Mr. Hashimoto and Mickey Kantor, the U.S. trade representative, met three times yesterday, ending their final session well after midnight. A Japanese official said the negotiators planned to meet again at 11 a.m. (5 a.m. EDT).

When yesterday's final session ended, it was not clear if the talks had reached the final stage of dealing with the most contentious issues, including commitments by Japan's auto makers to buy more U.S.-made components.

"The impression we have is that he wants a deal," one senior U.S. official said of Mr. Hashimoto. "But it is still unclear how far he can go."

The Clinton administration says that if there is no agreement by 11:59 EDT tonight, it will impose 100 percent tariffs on Toyota's Lexus, Honda's Acura and other Japanese luxury cars. If the automakers raised prices on their cars by a similar amount, they would effectively price them out of the U.S. market.

If an agreement is reached, it would hinge on a side document, agreed to by Japan's carmakers but not signed by the Japanese government, that would lay out a series of "voluntary plans" for increased purchases of U.S. auto parts.

Japanese officials said that the United States had proposed to word any such separate agreement in a way that assures the Japanese car industry that it would not be subject to penalties even if the car manufacturers failed to meet a series of benchmarks in the agreement. Those benchmarks would be intended to verify that Japan's auto industry was buying an ever-increasing number of U.S. components.

Any such deal -- which still appeared to be just out of reach as yesterday's sessions wound down -- could carry political risks on both sides of the Pacific, with each country undoubtedly tempted to describe the accord in very different terms.

Washington could be counted on to say that it won a major victory by getting Japan to agree to "measurable progress" in increasing parts purchases.

Tokyo would certainly insist that it had defeated Mr. Clinton's efforts to get Japan to agree to "numerical targets."

The Japanese government, by not being a party to that part of the agreement, could argue that it had not engaged in "managed trade," even if it had choreographed every move.

The feverish late-hours maneuvering was a marked turnaround from the negotiating earlier yesterday.

In the morning, top administration officials in Washington had joined in a conference call with Mr. Kantor at which he described, in very pessimistic terms, his first negotiating session with Mr. Hashimoto, one of Japan's top politicians and a leading candidate to be the next prime minister.

"It sounded like this whole thing was over, that there was no progress," said one official familiar with the briefing.

But a few hours later, Mr. Hashimoto's tone changed, and he discussed in great detail a paper handed to him by Mr. Kantor that laid out what one U.S. official called "creative alternatives."

With the talks at a critical stage, Mr. Clinton faces a difficult choice today: Take what Tokyo is offering now or move ahead with the sanctions on the bet that another, perhaps better, deal lies ahead once the Japanese carmakers begin to feel some financial pain from being shut out of the luxury-car market in the United States.

Early yesterday, word was circulated that President Clinton had already set aside time today to deliver a tough public message to the United States about the dispute.

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