U.S. Warns Japanese on Trade Steps : ‘Must Hear Cash Registers Ring,’ Shultz Tells Abe

Secretary of State George P. Shultz said Saturday that Japan has promised specific steps to lower trade barriers to American telecommunications products, but he warned Japanese Foreign Minister Shintaro Abe that much faster progress must be made to stave off protectionist sentiment.

“We must begin to hear the cash registers ring,” Shultz said after a two-hour meeting with Abe.

A senior State Department official said that Shultz tried to “convey the strength of feeling in this country” about the imbalance in Japan’s trade with the United States. Last year, the United States imported about $37 billion more from Japan than it exported to Japan.

“We are trying to prevent a wave of protectionism in this country,” the official said. “In our view, Japan needs to move much more quickly.”

Domestic Opposition

He said that the Reagan Administration believes Japanese Prime Minister Yasuhiro Nakasone is genuinely committed to opening markets to American goods but noted that Nakasone’s recently announced drive to increase imports faces domestic political opposition in Japan.

Abe told reporters: “We have made a great deal of progress. . . . I am very confident that Japanese-U.S. trade relations are moving in the right direction.”

The United States has long accused Japan of maintaining artificial obstacles to American imports through technical standards and government regulations as well as tariffs. At a January meeting in Los Angeles, President Reagan and Prime Minister Nakasone launched negotiations on reducing trade barriers in four areas where U.S. products appear competitive: telecommunications, electronics, forest products and medical equipment and pharmaceuticals.

Progress Cited

Shultz and other U.S. officials said Saturday that significant progress has been made in telecommunications--where several U.S. firms are hoping to sell equipment to Japan’s telephone company--but little progress in forest products, where Japanese wood producers have been protected by high tariffs.

Abe told Shultz that his government has agreed to reduce the now-complex technical standards that telecommunications products must meet “to the bare minimum,” Shultz said, possibly in time for an announcement at the Bonn economic summit meeting May 2-4.

Japan has also agreed that U.S. companies can supply their own test data for such standards and that representatives of foreign firms will be included on the boards that set the standards, Shultz said.

In the area of communications satellites, the Japanese have agreed to allocate frequency bands to private ventures. In medical equipment, they agreed to change insurance rules that had blocked the importation of U.S.-made kidney dialysis machines.

But in lumber and other forest products--an industry crucial to the Pacific Northwest--the Japanese merely reaffirmed their recent agreement to discuss the issue of tariffs in future negotiations.

“We are very pleased that the Japanese, with some hesitance, have agreed to put that issue on the table,” the State Department official said. “Of course, in our view, it’s got to be more than on the table. We’d like to see substantial reductions in those tariffs as soon as possible.”

A spokesman for Foreign Minister Abe, Kiyohiko Nanao, said that the tariffs on lumber would be maintained at least until 1987. “It’s not only an economic and social problem, it constitutes a political problem in Japan as well,” he said.

U.S. officials said that Shultz’s main message was directed not only at the Japanese, but also at Congress, where sentiment for protectionist measures has been running high.

One said that Shultz sees the issue not as a U.S.-Japanese confrontation but as a conflict between those in both countries who want free trade and those who favor protectionism.

“We are all threatened by protectionism,” Shultz said. “Protectionism is not a cure for an illness. It is itself an illness and one that can spread, like a plague.”

In an interview with The Times on Friday, Vice President George Bush also reaffirmed the Administration’s opposition to protectionist measures. “If it was just something that would clearly start a trade war, I don’t think the President would go along with it,” Bush said. In a trade war, Bush said, “Everybody would lose.”

Shultz also warned that trade negotiations alone “are not going to solve the trade deficit problem by themselves. That problem has to do very importantly, at least in my judgment, with such matters as relative economic growth . . . (and) the flow of funds into the United States.”

Abe’s hastily arranged trip to Washington--which also included a friendly round of golf with Shultz on Saturday afternoon--came after an unusual television appeal by Nakasone to his countrymen “to buy as many imported goods as possible” to reduce foreign resentment over their trade surplus.

On Friday, Japan’s Ministry of International Trade and Industry elaborated on the government import-enhancement efforts, saying that 60 leading Japanese companies would be enlisted to promote foreign products. Nakasone also promised to liberalize imports through reduced tariffs, eased technical standards and import regulations and government-sponsored advertising and financial incentives.

But he maintained that the imbalance is also the fault of the United States, whose high-valued dollar has penalized American goods sold abroad.