Japan Agrees to Talks With U.S. on Series of Broad Economic Issues

PARIS — Japan agreed Wednesday to begin wide-ranging talks with the United States on a series of broad economic issues that the Bush Administration says are impeding progress on reducing the gaping U.S. trade deficit.

The agreement to start the talks was worked out at a meeting of Cabinet officers from both countries, including Japanese Foreign Minister Sosuke Uno, who has been tapped to be Japan’s next prime minister.

The Japanese also indicated that, while still formally protesting last week’s threat of possible trade sanctions, they will negotiate on U.S. complaints that it is trading unfairly in supercomputers, satellites and lumber.

The agreement, hammered out during a meeting of the Paris-based Organization for Economic Cooperation and Development, allayed earlier fears that Japan might refuse on principle to take part in either set of talks.

That might have exacerbated U.S.-Japanese trade relations and possibly led to a trade war. The Administration issued a call for both talks last week as part of a crackdown required by the 1988 Omnibus Trade Act.

Separately, however, the United States continued to draw fire from other industrialized countries on its use of the 1988 trade law to threaten retaliation “unilaterally” against U.S. trading partners.

Threatening System

During ministerial-level discussions Wednesday, Uno and European Community Trade Minister Frans Andriessen were joined by dozens of other officials at the 24-country OECD meeting in criticizing U.S. policies.

In a speech typical of many at the meeting, Uno said the new U.S. trade tactics are “creating a serious danger to the free trading system.” He said he had come to the session “full of dismay and with . . . foreboding of a crisis.”

Andriessen faulted the United States for resorting to “unilateralism” in acting outside established trading rules to seek redress on its trade complaints. He said he believes that the United States is “sincere” in pledging to use the new trade law as a tool to open world markets, rather than close American markets.

“The question is,” he added, “whether it is the right one.”

Those sentiments are expected to be included in an official communique that the 24 governments will issue today chiding the United States for “unilateralism” in dealing with trade disputes involving other countries.

In negotiations Wednesday night and early this morning, U.S. officials were able to hold the criticism to a single paragraph in the communique--a far milder rebuke than most other delegations had wanted. That meant that any criticism also is likely to be mild at the annual seven-nation economic summit conference to be held in Paris in mid-July.

Nevertheless, the communique would mark the first time in recent memory that the United States has been singled out for ostensibly violating the spirit of international trade laws.

U.S. officials also had to scramble Wednesday to counter growing fears among allies that the actions taken under the new trade law mean that Washington is abandoning the current round of international trade-liberalization talks.

Considered Key Talks

The negotiations, which the United States helped launch in 1986, are now going on in Geneva. Washington is counting on them to broaden existing trade rules to prohibit unfair trading in services, investment and intellectual property.

Meanwhile, the United States continued to clash with West Germany and Japan on whether those countries should raise interest rates at home. Japan has already raised interest rates, contending that it had to do so to combat inflationary pressures, and West Germany’s central bank, the Bundesbank, is debating whether to follow suit today.

Rising interest rates abroad ease pressures that are making the dollar rise in value, and a strong dollar damages U.S. products in their price competition with foreign goods. But the Treasury Department has been warning that increasing interest rates in Japan and West Germany could do more harm than good by bringing on an economic slump in those countries that could reduce their purchases of U.S. exports.

Analysts say that if the Bundesbank raises interest rates, the U.S. Federal Reserve Board may be forced to nudge U.S. rates down.

In a speech at Wednesday’s OECD session, Treasury Secretary Nicholas F. Brady reiterated a statement by President Bush earlier this month that the dollar’s recent rise against other major currencies “is a matter of concern.” Meanwhile, Commerce Secretary Robert A. Mosbacher announced a new accord with the European Community that will guarantee the United States more say in shaping product standards for the integrated European market that will be created in 1992.

Mosbacher, in Paris after a weekend of negotiations in Brussels, said that as a result of this and other recent actions, U.S. fears that 1992 will see the creation of a “Fortress Europe” are “diminishing.”