
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 28, 1990                   TAG: 9006280776
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/1   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: TOKYO                                LENGTH: Medium

TRADE ACCORD REACHED

Japanese and U.S. negotiators today reached an agreement to help trim the $49 billion U.S. trade deficit with Japan. They hailed the accord as an unprecedented step toward easing tensions between the two partners.

Details of the accord were to be announced later, but officials emerging from the talks in the Foreign Ministry said there had been compromises and cooperation. They said there was no need to schedule further sessions.

There had been concern that this round in the so-called Structural Impediments Initiative might have to be continued next week in the United States to reach agreement on a final report about far-reaching economic policy changes.

President Bush welcomed the accord and said "the effects will be beneficial for the entire world." In a written statement in Washington, Bush credited the "strong and courageous political leadership" of Prime Minister Toshiki Kaifu for the progress achieved.

Linn Williams, the U.S. deputy trade representative, said Bush and Kaifu had taken important steps, especially Bush in his announcement of willingness to consider tax revenue increases.

"It is a remarkable thing that these two economies have done," Williams said. "I see this as a kind of joint leadership. Japan and the United States got together on difficult issues and worked together constructively. We should be pleased with the efforts and results."

Bush and Kaifu talked by telephone late Wednesday about Japan's final increased offer to boost public works spending - a key area of disagreement.

Williams said the trade talks were "an important influence" on Bush's tax move, which is aimed at reducing the federal budget deficit. The deficit is regarded as a fundamental cause of the trade imbalance, because it fuels U.S. demand for consumption and imports from Japan.

Raising U.S. tax revenues may thus reduce Japanese exports and cut the trade surplus.

Bush's announcement was followed by a Japanese compromise Wednesday to increase planned public works spending. That might help reduce the trade imbalance by increasing sales of U.S. products and construction services in Japan and soaking up some excess Japanese savings and investment funds.

by CNB