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

DATE: FRIDAY, February 18, 1994                   TAG: 9402180138
SECTION: BUSINESS                    PAGE: A7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: TOKYO                                 LENGTH: Medium

JAPAN BOWS TO THREATS TOKYO AGREES TO CHANGE ITS TRADE RULES

Under the threat of U.S. sanctions, the government decided Thursday to develop a wide-ranging package of measures to trim Japan's record trade surplus and possibly head off a trade war.

Prime Minister Morihiro Hosokawa and top trade negotiators agreed to focus on four areas - promotion of imports and foreign investment, deregulation, tougher anti-monopoly enforcement, and fairer government purchasing.

The decision reflects growing anxiety in Japan over U.S. threats of trade retaliation following a breakdown in talks in Washington last week on reducing the two countries' trade imbalance.

"The ball is in Japan's court," said the chief government spokesman, Masayoshi Takemura.

He said the government needs to plan the package carefully, because it will "lead to a change in style and structure of the entire Japanese economy."

The four areas in the new trade package reflect key U.S. complaints. But the package is unlikely to solve the key issue that caused last week's deadlock: a U.S. demand for numerical benchmarks to measure the success of trade agreements.

Japan contends specific goals would require too much interference in business decisions.

Takemura said the new package might be worked out before a meeting Feb. 26 of finance officials from the Group of Seven richest industrial nations. Japan may send an emissary to Washington to explain the package once it is ready, he said.

Japan's strategy is to keep the trade dispute from boiling over, because a trade war with the United States - by far its biggest market - could cause serious economic damage.

"We ought to deal with specific issues in an objective manner. We should not handle trade issues sensationally," said Kochiro Matsuura, a deputy foreign minister, referring to a cellular-telephone dispute with Washington.

Tuesday, Trade Representative Mickey Kantor said the United States was considering sanctions against Japan for allegedly violating an agreement to open its market for cellular telephones.

Tokyo insists U.S. negotiators have failed to understand its position and that much of the trade imbalance is caused by insufficient efforts by American companies in Japan.

But worried officials in Hosokawa's government appear ready to swallow some pride to avoid jeopardizing relations with Washington.

"If we leave things as they are, our relationship of trust will be lost, and it will be a mess," Ichiro Ozawa, the top government strategist, said in an interview with the newspaper Sankei. "Someone should visit the United States, maybe as early as March, to restore trust - anyone, it doesn't matter who."

by CNB