EXPECT NEW SPARKS TO FLY IN U.S. TRADE WITH JAPAN

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

DATE: FRIDAY, January 8, 1993                   TAG: 9301080287
SECTION: BUSINESS                    PAGE: A3   EDITION: METRO   
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium
EXPECT NEW SPARKS TO FLY IN U.S. TRADE WITH JAPAN
A year of relative calm in U.S.-Japanese trade relations followed President Bush's nightmarish trade mission to Tokyo. There are abundant signs the quiet is ending.
A rising trade deficit with Japan, auto industry pressure on President-elect Clinton and skepticism about pledges made during Bush's trip could put trade between the economic superpowers on center stage again.
Last month, the United States criticized Japan for failing to honor an agreement to buy more American-made computer chips. In Tokyo, a government panel suggested tough retaliation if the United States adopts trade sanctions.
Add to the mix a Democrat-controlled Congress expected to pursue restrictive trade legislation.
"It may create more friction to negotiate something meaningful," said Rep. Sander Levin, a Michigan Democrat who wants to make a voluntary quota on Japanese auto imports mandatory.
"What we're going to have is a new era, I think," he said. "There's going to be more activism on the part of the Clinton administration, more cooperation between Congress and the Clinton administration."
That's what Japan fears. Congress is expected to take up the trade imbalance, demands for more access to Japanese markets, sanctions for unfair trading and laws to monitor targets for auto parts and vehicle sales to Japan.
Also, U.S. negotiators face the sensitive subject of Japan's rice import ban at world trade talks. The United States is moving toward anti-dumping duties on imported Japanese steel.
"The striking feature is that after their disaster [the Bush visit] the Americans haven't moved and the Japanese are lying low," said Robert Z. Lawrence, a Harvard professor of international trade. "But there are these signs on the horizon that the calm won't last."
The U.S. trade deficit with Japan is sure to provoke new criticism, even if the increase is due partly to Japan's economy, which has reduced demand for imports.
In the first nine months of 1992, U.S. imports from Japan exceeded exports by $38.9 billion, a 10 percent increase over the 1991 period, census figures show.
Other issues:
\ Semiconductors. The United States in late December said Japan was falling short of a promised 20 percent market share for foreign computer-chip makers by year end. The third-quarter level of 15.9 percent was up from a year earlier but down from 16 percent the previous quarter.
\ Auto parts. Japan agreed during the Bush trip to double purchases of U.S.-made auto parts to $19 billion by 1995 and increase U.S. parts on American-assembled Japanese cars to 70 percent from 50 percent.
Executives doubt the goals can be reached. The auto parts deficit with Japan, which declined in 1990 and 1991, rose in 1992.
\ Auto sales. Japanese automakers promised to import 20,000 more American cars a year. Those figures were unrealized in 1992, with the Japanese economy partly to blame.
Chrysler Corp. said it sold about 500 Jeep Cherokees in Japan last year, down from 1,000 in 1991, despite 25 percent price cuts and right-side steering to conform with Japanese driving standards. General Motors Corp. is projecting flat or slightly lower 1992 Japan sales of about 9,500 units.

by Bhavesh Jinadra by CNB