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

DATE: SUNDAY, February 13, 1994                   TAG: 9402130075
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

CLINTON CONSIDERS OPTIONS TO THREATEN JAPAN ON TRADE

Prime Minister Morihiro Hosokawa said Saturday he was For updated information, call InfoLine and enter code 2024. looking forward to going back to the bargaining table as soon as both sides had a chance to "cool their head."

But following the failed summit between President Clinton and Hosokawa on Friday, U.S. officials said they have no interest in resuming negotiations unless Japan changes its stance in the talks.

Instead, the U.S. side is considering what other steps it might take against Japan to reduce its $60 billion trade imbalance.

"We just have to examine what our next step should be, and we'll be turning to that next week," Clinton said.

Asked about the potential of U.S. trade sanctions, Hosokawa cautioned of a possible confrontation before the General Agreement on Tariffs and Trade, the Geneva-based international organization that governs world trade.

Hosokawa did not say whether Japan might retaliate with trade sanctions of its own, but any U.S. moves conceivably could spark a trade war between the world's two largest economies.

U.S. officials, while declining to specify when they would act, said they are considering a list of options - generally understood to mean punitive trade sanctions.

"The status quo is unacceptable," one senior official said. U.S. action will "be prompt, it's going to be careful, it's going to be responsible and it's going to be effective."

A convenient target might be a case involving a dispute over access by Motorola to the cellular phone market in Japan.

With Tuesday the deadline for a decision, the administration could declare that Japan has not lived up to its agreement to open its market to Motorola and retaliate with higher tariffs on Japanese telecommunications products.

Among many other options available to the administration, according to U.S. officials and outside experts are:

Reviving by presidential order a lapsed congressional mandate that required the United States to identify countries engaging in unfair trade practices and target them for possible retaliation. Some in Congress are pushing for this and say the White House has led them to believe Clinton will do it.

Suing the Japanese under antitrust laws, based on the common Japanese practice of multilayered companies with subsidiaries that could be seen as collusive.

Limiting the U.S. import of Japanese products.

Acceding to requests by U.S. automakers that Japanese vans and minivans be reclassified as trucks and thus subject to a 10-fold tariff increase. The vans are classified as cars, with a much lower tariff.

Despite the threats, Hosokawa said Saturday that he and Clinton share a view that the United States and Japan have matured to a relationship "between grown-ups" in which friends can disagree.

"And I don't think the failure of an agreement will lead immediately to sanctions," Hosokawa said.

But he gave no sign that Tokyo would compromise on the key stumbling block that prevented him and Clinton from reaching agreement Friday - disagreement over establishing criteria to measure how much access foreign products are getting to Japanese markets.

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INFOLINE