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U.S., Japan Blame Each Other as Trade Talks Collapse

May 6, 1995

WASHINGTON (AP) _ Moving swiftly after a breakdown in U.S.-Japan trade talks, President Clinton’s National Economic Council reached agreement today on undisclosed action to respond to Japan’s refusal to strike a deal.

U.S. Trade Representative Mickey Kantor, emerging from a two-hour meeting, declined to discuss the agreement beyond stating that all members of the council were in accord on the recommendation being forwarded to the president.

``The NEC considered all the options available with regard to responding to this situation,″ Kantor said. ``We would expect an administration announcement will be forthcoming.″

He declined to give any timeline.

Each side is bitterly blaming the other for failure to reach a deal to expand sales of U.S.-made autos and parts in Japan. Clinton earlier had promised ``strong action″ in the event no agreement was reached.

``I think this government is ready to make a fairly rapid decision in this regard,″ Kantor said before leaving Canada, where he met with Japanese trade officials for five days.

In Tokyo, Prime Minister Tomiichi Murayama expressed regret over the breakdown of talks. Japan did ``all it could do″ to settle the issue in line with international trade rules, Foreign Ministry officials quoted Murayama as saying.

The top official of the Japan Automobile Manufacturers’ Association praised Japan’s rejection of U.S. calls for so-called ``voluntary targets″ in the purchase of auto parts.

``It is impossible for us to make further concessions in the talks by formulating voluntary targets,″ said acting head Yoshifumi Tsuji, according to the Kyodo News Service.

Reflecting on the five days of talks, Kantor said, ``The Japanese government adopted a rigid ideological stance that appeared bent on failure, while we attempted to seek practical solutions to real problems.″

But Japanese Trade Minister Ryutaro Hashimoto put blame for the talks’ failure on the United States for refusing to budge from its insistence that any deal had to include so-called voluntary purchasing plans designed to boost sales of U.S.-made auto parts to Japanese factories operating in the United States and Japan. The Japanese have blasted the plans as managed trade that seeks to provide guaranteed market-share to U.S. manufacturers.

Administration sources, speaking on condition of anonymity, have said that officials have drawn up a list targeting more than $1 billion in Japanese imports for punitive tariffs, the largest such trade case in U.S. history.

Industry sources, also talking on condition their names not be used, said that the sanctions list was likely to focus on autos and auto parts with one option being a sharp boost in the tariff on Japanese luxury cars, autos that sell for more than $30,000. The tariff, or border tax, on all foreign cars is now 2.5 percent.

Trade negotiators from both countries had met for five days before finally concluding late Friday night that no deal could be reached. In addition to the purchasing plans, the United States was demanding agreement on the expansion of dealerships in Japan selling U.S. cars and relaxation of safety regulations that have served to block sales of U.S.-made parts to repair shops.

Hashimoto termed ``quite regrettable″ the failure of the two countries to strike a deal, adding, ``I cannot help but say we put all the cards on the table.″ He said Japan had made significant concessions on the dealership and replacement part issues.

Hashimoto again repeated Japan’s stance that if the United States publishes a sanctions list, Japan will immediately bring an unfair trading complaint against the United States.

However, he said that Japan would be willing to continue negotiating with the United States while the World Trade Organization considers its case and while the clock would be running on the U.S. sanctions, which presumably would be set to take effect in 30 days. In the past, Japan has indicated it would not negotiate under a threat of sanctions.

The U.S. auto and parts industries issued statements in support of the administration’s hardline bargaining stance.

``The key to opening Japan’s closed market has always been in Japan’s hands ... Once again Japan failed to open that door,″ said Robert J. Eaton, president of Chrysler Corp. ``We will support whatever further action the Clinton administration takes concerning Japan’s trade.″

The American Automobile Manufacturers Association, the trade group for the Big Three auto companies, said, ``after nearly two years of negotiations, we now know how far Japan is prepared to go to maintain its closed automotive market.″