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Trade Minister Hints at Concession in U.S. Trade Talks

March 28, 1990

TOKYO (AP) _ Japan is considering revising a law that limits the opening of of large foreign stores, a key issue in trade negotiations with the United States, government officials indicated Wednesday.

Kabun Muto, minister of International Trade and Industry, told business leaders that anything short of a change in the Large-Scale Retail Store Law is unlikely to satisfy U.S. negotiators in next week’s trade meetings in Washington.

″The U.S. is quite adamant on the issue,″ Kyodo News Service quoted Muto as saying. ″I am quite worried that our proposal for only improving enforcement of the law may not get us off the hook.″

At Prime Minister Toshiki Kaifu’s request, the government has created a series of proposals aimed at satisfying U.S. requests in the so-called Structural Impediments Initiative talks. The talks are aimed at eliminating factors in each country’s economy that hinder reductions in their $49 billion trade imbalance.

U.S. and Japanese negotiators are to exchange interim reports on their progress during the fourth round of the talks, set for next Monday and Tuesday in Washington.

The United States reportedly has made more than 200 proposals for eliminating what it contends are barriers to foreign involvement in Japan’s economic and business structure.

Government officials have declined to disclose the contents of the proposals, but have acknowledged that scrapping the Large-Scale Store Law is one of three major U.S. demands.

The law requires large stores to obtain a consensus from small, local shop keepers before opening a new outlet in a given area. Otherwise, the large stores must wait as long as eight or 10 years.

In contrast, many Japanese retailers such as Mitsukoshi and Tokyu department stores and Yaohan supermakets already have opened stores in the United States.

In a test of the barriers, the government has agreed to consider a request by U.S. toy retailer Toys R Us Inc. to open a 53,800-square-foot discount store in Niigata, 160 miles northwest of Tokyo.

U.S. officials say such large-scale stores are more likely to carry more foreign products, leading to an increase in Japan’s imports.

Japanese business leaders have expressed strong opposition to Muto’s idea of relaxing the law because it would hurt small shop owners.

″Before we review the law itself, we should monitor the enforcement of the law first,″ said Rokuro Ishikawa, president of the Japan Chamber of Commerce and Industry, one of Japan’s most powerful business organizations.

Opposition also has been expressed within the governing Liberal Democartic Party against the administration’s plan to revise the law.

A senior party official, who spoke on condition of anonymity, said legislators opposing the change were concerned about losing political support from small shop owners, who are among the party’s traditional backers.

″I think most of us understand logically that the U.S. demands make sense and are good for Japan, but many politicians are reluctant to pay the political cost for the benefit of others,″ he said.

″Also as a party, we have to worry about whether we are able to win the opposition camp’s approval to pass a revision of the law in Parliament,″ he added.

The governing Liberal Democratic Party has the power to decide the content of trade proposals Japanese negotiators will present to their American counterparts in next week’s talks, but any legal changes must clear the opposition-dominated upper house.

On Wednesday, Finance Minister Ryutaro Hashimoto told that Kaifu a rapid, sharp increase in Japan’s public works spending - another U.S. proposal - was not possible.

The United States has proposed Japan increase public works spending to 10 percent of gross national product.

The finance minister said he rejected the U.S. demand for the increase when he met with U.S. leaders last week in Washington.

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