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

DATE: FRIDAY, May 20, 1994                   TAG: 9405200047
SECTION: BUSINESS                    PAGE: A11   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

TRADE DEFICIT SHRINKS

However, the United States suffered a 25 percent jump in its deficit with Japan, lending new urgency to an effort to restart stalled market-opening negotiations between the two countries.

U.S. Trade Representative Mickey Kantor told Congress on Thursday there were ``potentially hopeful'' signs that preliminary discussions with a high-level Japanese delegation would led to a full resumption of the talks.

But he refused to go into details about what was contained in a new Japanese offer.

The ``framework'' talks broke down Feb. 11 after an acrimonious summit between President Clinton and then-Prime Minister Morihiro Hosokawa over U.S. demands that Japan accept numerical targets to measure progress in boosting U.S. export sales.

The Commerce Department's latest monthly trade report showed that the U.S. deficit narrowed to $7.46 billion, a better-than-expected showing that pushed the gap between imports and exports down by 18.5 percent from a revised February level of $9.15 billion.

The improvement reflected the fact that exports of U.S. goods shot up 12.7 percent to a record $42.17 billion. America's imports also hit a record, rising 6.5 percent to $54.21 billion, led by increases in automobiles and oil.

The government has added services to its monthly trade report. For March, the services surplus for such things as tourism, consulting fees and movie rentals was $4.58 billion.

Combining the services surplus and the $12.04 billion goods deficit produced the March overall deficit of $7.45 billion.

Despite the overall improvement, the U.S. merchandise deficit with Japan surged to $5.8 billion in March, third largest imbalance on record, compared with a February deficit of $4.63 billion. Analysts said the main reason for the increase was higher shipments of Japanese autos.

But private economists contend that economic disparities, and not Japanese trade barriers, are the principal cause of the widening deficit with Japan.

``Other countries are not growing, and we are, and that keeps demand for our products weak while our demand for foreign goods is rising,'' said Bruce Steinberg, an economist at Merrill Lynch in New York.

He predicted that this year's goods deficit would hit $154 billion, up from $132 billion last year and $96 billion in 1992, and would improve only marginally in 1995.

U.S. merchandise imports also hit a record last month, climbing 6.5 percent to $54.21 billion. This reflected a big jump in shipments of autos and auto parts, which climbed $799 million to $9.62 billion last month.

America's foreign oil bill also rose sharply in March, climbing by 13 percent to $3.65 billion, reflecting higher volume. The price of crude petroleum fell during the month, declining to $11.78 a barrel, compared with $12.03 in February.

After Japan, America's largest trade deficit was with China, an imbalance of $1.38 billion. President Clinton must decide by June 3 whether China has made sufficient progress in human rights for the United States to renew China's low-tariff trade privileges.