Strong Dollar Part of Trade Problem, Nakasone Says

Prime Minister Yasuhiro Nakasone said Saturday that unless the effect of the strong dollar on trade is corrected, market-opening measures that his government will announce Tuesday will not quickly reduce Japan’s trade surplus with the United States.

He also acknowledged that new areas of trade friction with the United States might emerge after the measures are announced.

The prime minister made the statements in appealing to eight elder statesmen of his ruling Liberal Democratic Party’s “supreme advisory council” for support of what he called “my best effort” to open Japan’s markets.

To a question from former Prime Minister Takeo Fukuda about how much Tuesday’s measures will reduce Japan’s 1984 trade surplus of $36.9 billion with the United States, Nakasone said he did “not expect results to appear quickly in numbers.”

Discussions in Bonn

He cited problems in trade created by the strength of the dollar, which he said will be discussed at the Bonn summit of seven industrialized nations May 2-4, and said a stronger yen and cheaper dollar will be needed to correct some of the U.S.-Japan trade imbalance.

A strong dollar drives up the price that Japanese importers must pay for American goods and lowers the cost of Japanese goods purchased in dollars by American importers.

Two of the elders--including former Prime Minister Zenko Suzuki, who asked about frictions emerging in new trade areas after Tuesday’s announcement--criticized the United States. Suzuki expressed resentment that the United States has forced Japan to declare its intention to abandon commercial whaling.

Another elder, Hajime Fukuda, former Speaker of the lower house of Parliament, complained that the United States had misinterpreted Japan’s effort to restrict passenger car exports for a fifth year, seeing it incorrectly as a move to flood the American market with Japanese cars. Fukuda criticized Nakasone for failing to adequately explain to the United States Japan’s decision March 28 to impose a fifth-year quota at the level of 2.3 million vehicles.

An Increase of 24%

While the 2.3 million figure is 24.3% higher than the quota fixed during the 12-month period that ended last Monday, Japan sees it as an earnest move to extend for yet another year a system that protects U.S. auto makers.

Nakasone acknowledged that the quota decision produced the opposite reaction to what was intended and admitted that “there might have been a better way of doing it (making the announcement).”

The prime minister told the party leaders--four former prime ministers, three ex-Speakers of Parliament and the party’s secretary general--that he will deliver a market-opening appeal Tuesday, an action that both he and his predecessor, Suzuki, have taken before. Unlike the two previous appeals, made in printed statements, Nakasone said he will deliver the appeal in a nationally televised news conference. He said the appeal will be directed at both the Japanese people and foreign critics of Japan.

Congress Among Critics

The foreign critics include the U.S. Congress, which has called for trade retaliation against Japan if it fails to open its markets.

The Yomiuri newspaper reported today that Nakasone, in his appeal, will call on Japanese industries likely to be affected by increased imports to make “sacrifices to some extent” to open up Japan’s market. He also is to ask the Japanese people to accept a new consumer philosophy under which the government will no longer guarantee the quality of every product sold in Japan through strict standards applied to manufactured products, Yomiuri reported.

Detailed government standards and safety regulations have been cited repeatedly by foreign businessmen as barriers to imports here.

Nakasone is expected to warn consumers that, in the future, “gaps” will appear in the quality of products sold in the marketplace, and he will urge them to become “shrewd consumers” capable of making their own choices in quality, the newspaper said.

A Pledge to the World

The prime minister also is reportedly planning to pledge to the rest of the world that Japan will continue efforts, beyond measures to be announced Tuesday, to open its markets and fulfill its international responsibilities as one of the world’s major economic powers by contributing to the promotion of free trade, Yomiuri reported.

The meeting of the ruling party’s Supreme Advisory Council was called to win added party support against charges by party members in Parliament that Nakasone has made too many promises and concessions to the United States.

It came a day after the ruling party’s forestry affairs committee again reiterated its opposition to lowering tariffs on imports of plywood, particle board and veneer (which now range between 12% and 15%) and on kraft paper and liner board used to make boxes (9% to 12%) in Tuesday’s market-opening package.

Tsutomu Hata, chairman of the forestry committee, criticized Nakasone for allegedly accepting “unconditionally” American demands on forestry products.

Issue of Forestry Products

Nakasone publicly has called only for gradual reduction of tariffs on forestry products over a three-year period, during which, he said, the government will provide subsidies to domestic plywood and wood-products manufacturers. By comparison, the United States has demanded a complete elimination of tariffs on forestry products, one of four trade sectors that it has singled out for special emphasis.

Meanwhile, Shin Kanemaru, secretary general of the ruling party, disclosed that he sent letters Saturday to Republican and Democratic floor leaders in the U.S. Senate and House of Representatives promising that his party will continue its own efforts to open Japan’s markets and asking for reciprocal cooperation from Congress.

In the letters, Kanemaru referred to passage by the Senate Finance Committee of a bill to require retaliation against imports of Japanese telecommunications equipment if Japan fails to open its telecommunications market to American products. He said Japan last Monday carried out a liberalization of its telecommunications market “to a degree without comparison” with any other country outside of the United States. He added that if such a market-opening effort is not understood by Congress, Japan will come to question why such efforts should be made.

2 Days in Washington

Reishi Teshima, deputy vice foreign minister, wrapped up two days of talks with U.S. officials and members of Congress in Washington on Friday by telling a news conference restricted to Japanese reporters that Japan “must prove with specific actions that it is working to open our market” to quell protectionist moves in Congress.

“Implementation of measures in Tuesday’s market-opening announcement must start even from the next day,” he declared.

Teshima told Japanese reporters in Washington that he “didn’t have time” to meet American reporters, but he offered no explanation why he scheduled a press conference that would have included the Americans and then canceled it. Throughout his two-day visit as special envoy of Foreign Minister Shintaro Abe, who himself will visit Washington next Friday and Saturday, Teshima refused to make comments to U.S. reporters.

According to Japanese newspapers, U.S. officials told Teshima that the Reagan Administration regards negotiations on telecommunications as having reached a “basic understanding” but will be watching closely to see what actions Japan promises in other fields in Tuesday’s announcement.

Administration officials also warned Teshima that Japan should “pay attention” to anti-Japanese moves in Congress, newspapers here reported.