U.S. concerned over widening Japan trade gap

U.S. concerned over widening Japan trade gap

WASHINGTON (Reuter): U.S. Trade Representative Charlene
Barshefsky on Thursday expressed growing frustration with Tokyo
over the widening U.S.-Japan trade gap and a lack of progress in
resolving trade frictions.

"We are obviously very concerned about the current numbers,"
Barshefsky told a U.S. Trade Representative advisory committee.
She noted a sharp increase in Japanese exports to the United
States at the same time U.S. sales to Japan have slowed
significantly.

She complained that "attitudes" in Tokyo were impeding
progress in dealing with a number of "important" bilateral trade
issues and said that U.S. "concerns rather than subsiding over
time have increased over time."

In particular, she said, Japan was not moving ahead with
promises to deregulate its economy. U.S. officials were hoping
that cutting red tape in Japan will help lower costs and boost
consumer demand and at the same time reduce trade barriers they
say thwart foreign access to Japanese markets.

"We have a growing concern," Barshefsky told reporters
following her remarks to the advisory committee. "We do not see
Japan moving thus far toward meaningful deregulation that
promotes market access."

The United States has been pushing Japan to do more to boost
its domestic demand and to rely less on exports as a way to lift
itself out of its current economic slump.

The U.S. trade deficit with Japan has been climbing swiftly
since the beginning of the year, wiping out gains made last year
in reducing the gap. In July the deficit hit $5.2 billion, its
highest monthly level in two years. The total deficit with Japan
stood at nearly $31 billion in July, compared with about $27
billion for the same period in 1996.

Much of the increase is being attributed to a weak yen that
makes Japanese goods cheaper and a strong dollar that makes U.S.
goods more costly.

Barshefsky and other U.S. trade officials also point to a
highly regulated Japanese economy and other trade barriers they
say keep U.S. goods out.

Washington is currently pressing Japan on a number of fronts
to open its markets, including asking Tokyo to do more to fulfill
promises made in a 1995 auto trade agreement.

U.S. automobile manufacturers, noting lagging U.S. car sales
in Japan, have asked the advisory committee to cite Japan in a
report to be released next week listing the agency's trade action
priorities. U.S. and Japanese trade negotiators will also review
the accord in early October.

Japan says it is living up the 1995 agreement and argues that
U.S. automakers have to work harder to sell their products to
Japanese consumers.

Barshefsky, who is trying to convince Congress to renew
special trade negotiating powers for President Bill Clinton, said
enforcing existing trade agreements is a top priority for the
administration. Opponents of the so-called fast-track trade
negotiation legislation often point to the U.S. trade deficit as
a reason to reject new free trade agreements.

U.S. and Japanese trade negotiators this week have been
discussing renewal of a trade agreement aimed at increasing
foreign procurement by Nippon Telegraph & Telephone Corp.
Barshefsky said the two sides have made some progress but not
enough.

In Tokyo, U.S. and Japanese negotiators failed to reach
agreement to settle a long-simmering dispute over aviation
service despite a Sept. 30 deadline. Japan complained that U.S.
demands were too excessive, but negotiators agreed to meet again
next month.