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.