WASHINGTON (AP) _ The United States and Japan must reach an agreement to reduce Japan's trade advantage by at least 80 percent, the top executive of Ford Motor Co. said Tuesday.

''Japan should make its own decisions as to how to achieve this goal - importing more or exporting less, or both - and choose the product with which they decide to do it,'' said Harold ''Red'' Poling, chairman and chief executive officer. ''But we must insist that the Japanese achieve a balance within plus or minus $5 billion to $10 billion on an ongoing basis and that the balance be maintained over time.''

The Commerce Department reported last week that the U.S. trade gap with Japan hit $49.4 billion in 1992, up $6 billion from a year earlier. The trade deficit is the difference between what the country buys from other nations and what it exports.

Simply espousing the spirit of fair play hasn't been enough, Poling said, calling on President Clinton and Japanese leaders to reach an agreement to reduce the trade gap.

''It we continue to profess the philosophy of free trade, nothing will happen,'' Poling said in a speech at the National Press Club. ''They don't believe in free trade.''

The deficit could be wiped out over five years in 20 percent increments, he suggested.

''As I see it, the United States has been exporting free trade philosophy, while Japan has been capturing world markets, primarily ours,'' Poling said.

Poling acknowledged that the trade figures can't always stay equal.

''It shouldn't be zero all the time and it shouldn't be plus or minus all the time,'' he said.

Poling wouldn't propose any penalties were Japan to reject such a deal. He said he was confident Japan's leaders would stick to any agreement hammered out with Clinton.

Poling insisted that the domestic automakers aren't trying to corner the U.S. market and push out competition. He noted other industries that have been hurt by Japanese trade policies.

''I find it fascinating that there is no middle ground - either you're (accused of being) a free trader or you're a protectionist,'' he said.