Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 16, 1994 TAG: 9402160022
SECTION: BUSINESS PAGE: C-10 EDITION: METRO
SOURCE: Associated Press
DATELINE: TOKYO LENGTH: Medium
Prime Minister Morihiro Hosokawa, who returned Sunday night from a summit with President Clinton, ordered his Cabinet to come up with an emergency trade plan to avert sanctions and said he was "deeply concerned" about the yen's steep climb.
Kyodo News Service, however, said he also tried to allay a growing sense of anxiety by telling reporters, "The basic relationship between Japan and the United States will not be impaired if trade ties deteriorate a bit."
A stronger yen makes Japanese products more expensive overseas and shrinks profits from those sales when they are repatriated to Japan - a trend that should help slash the widening trade imbalance.
The Japanese currency soared to six-month highs in international currency markets, eliciting a chorus of concern from economic planners who fear the yen's rise could pull the rug out from under their plans to revamp Japan's sluggish economy.
The dollar ended Tuesday in Tokyo at 102.02 yen, down 3.67 yen from Monday's finish of 105.69 yen and just above its record postwar low of 101.25 yen set last August.
"Many Japanese are puzzled by what, indeed, the United States is trying to do," said Toyoo Gyohten, chairman of the Bank of Tokyo and a former top Finance Ministry official. "I'm afraid both the United States and Japan are beating completely wrong bushes."
TV news reports focused on the trade dispute and Hosokawa's order for his Cabinet to devise "emergency plans" to reduce the trade surplus with the United States, which swelled 20 percent last year to nearly $60 billion.
In Washington, U.S. trade representative Mickey Kantor took the first step Tuesday leading to possible trade sanctions later this year. He said Japan failed to live up to the terms of a 1989 trade agreement in which it promised to open up its lucrative cellular phone market to American firms.
Kantor said he would publish within a month a list of proposed trade sanctions the United States would consider using if the dispute is not resolved.
Chief government spokesman Masayoshi Takemura said he hoped Washington would refrain from sanctions. Tokyo has warned it might retaliate by taking its case to the international forum of the General Agreement on Tariffs and Trade.
by CNB