Reagan Plans Stiff Tariffs on Products From Japan

Associated Press

President Reagan, contending that Japan has reneged on a major trade agreement on computer chips, announced plans Friday to impose stiff penalty duties on a wide array of Japanese products including television sets and pocket calculators.

Reagan said in a statement that the action--the most sweeping trade retaliation the United States has taken against Japan since the end of World War II--would cover as much as $300 million in Japanese exports to the United States.

U.S. trade representative Clayton Yeutter told reporters, "This action should come as no surprise to the government of Japan."

Penalties on selected Japanese products will be as much as 100%, or equal to the current prices of the products themselves, potentially doubling the cost of those items to consumers.

Increases Not Expected

However, Yeutter and Commerce Secretary Malcolm Baldrige said they did not expect the action to result in actual major price increases to U.S. consumers. They said they doubted that Japanese companies would risk such big increases in the face of competition from elsewhere.

Products selected for targeting are only those that are also widely available from non-Japanese manufacturers.

Disc drives for computers, air-conditioning machines, refrigerators, personal computers and radio-tape players were on a preliminary list of dozens of Japanese products targeted by the White House.

Reagan accused the Japanese of failing to live up to an 8-month-old agreement to stop "dumping" semiconductors in markets outside the United States at prices far below their true value.

Agreement Cited

The President also said the Japanese have not lived up to another part of the agreement: opening their markets more fully to U.S. semiconductor sales.

"I am taking these actions in response to Japan's inability to enforce our September, 1986, agreement on semiconductor trade," Reagan said.

Officials said there would be a two-week waiting period before the actual tariffs take effect.

At that point, the list of targeted products will be narrowed, so that the penalty duties cover no more than about $300 million in products, officials said.

Tied to Competition

"We've tried to pick products on which there is considerable competition to the Japanese," Baldrige said. "It would be difficult for them to raise their prices. We don't think we'll see much of a price effect."

Baldrige told a White House briefing that he didn't expect the action to trigger an all-out trade war. But, he said, "We're looking at an 8-month-old agreement and we're looking at American jobs.

"We do this more in sorrow than in anger," Baldrige added.

Semiconductors are the tiny electrical chips that run computers and most other modern-day electronic devices.

Dumping of Chips

Japan had agreed last July to stop dumping computer chips in the United States and other markets at prices far below their true value.

And, although Japan apparently has stopped the practice in this country, Administration officials said there is solid evidence that Japanese computer chips are still being sold in other countries at artificially low prices--undercutting the U.S. semiconductor industry.

The move comes at a time of mounting trade frictions with Japan. Last year, the United States imported $58.6 billion more in merchandise from Japan than it exported to that country--the biggest single contributor to this country's record $169.8-billion 1986 trade deficit.

The two-week waiting period will both give Japan a chance to respond to the action and give the United States the opportunity to remove certain items from the target list, officials said.

U.S. Lost Sales

U.S. semiconductor manufacturers have contended that they have lost at least $160 million to $170 million in sales because of continued Japanese third-market dumping.

Products in which the Japanese have a corner on the U.S. market, such as videocassette recorders, are not on the list of proposed targets, Baldrige said. "We would be foolish to retaliate on those (VCRs), because the Japanese have most of the market," he said.

Baldrige denied that the action was an effort to "get tough" with Japan. "I don't think it's tough to insist they live up to their side of it (the agreement)," he added.

Japan May Appeal

In Japan, a trade official said if the United States imposes retaliatory sanctions, the government may appeal to the General Agreement on Tariffs and Trade (GATT) in Geneva, which sets rules regulating world commerce and provides a forum for settling trade disputes.

"It is one of the alternatives, but we cannot say anything until we see the final version of the U.S. legislation," said the official, who spoke on condition of anonymity.

Baldrige contended that the proposed actions would not violate international trading rules.

"We have taken no action against the Japanese that is not legal under GATT or under our trade laws," he said. "It's just that if one country wants to trade internationally, there have to be rules of the road. And we would expect that any country that we trade with, not just Japan, would live up to those same rules."

No Japan Comment

Hajime Tamura, Japan's minister of international trade and industry, said the government would not comment on the White House panel's recommendations until it had more details.

Baldrige said he hoped that some of the trade frictions between the United States and Japan might be eased by an upcoming meeting in Washington between President Reagan and Prime Minister Yasuhiro Nakasone.

"I think out of this will come a new understanding that will be helpful, although it's a rough patch we're going through right now. I think it would be a much rougher patch in the future if we didn't go through it now," Baldrige said.

On Friday, the White House announced that Reagan will meet Nakasone on April 30 at the White House. Reagan invited Nakasone to make the official visit and the prime minister accepted the invitation, the White House said.

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