Envoy, Minister Split on Advice to Nakasone : At Issue: How to React to Trade Dispute With U.S.

As the U.S. dollar continued its fall to record lows against the yen in trading here Tuesday, Japanese Prime Minister Yasuhiro Nakasone received conflicting advice on how to handle mounting trade tension with the United States.

While his ambassador to Washington counseled compromise, his minister of international trade and industry once again suggested retaliation.

Nakasone himself, who will visit Washington from April 29 to May 5, remained noncommittal about how to deal with President Reagan’s decision to impose 100% penalty tariffs on Japanese electronics products in retaliation for alleged violations of a U.S.-Japanese semiconductor agreement. He did, however, commit himself to working out new policies to stimulate growth at home, as the United States has requested.

In Washington on Tuesday, U.S. government officials dismissed the possibility of a “trade war” with Japan, but also said it was highly unlikely that the Japanese would be able to fend off the tariffs. Commerce Secretary Malcolm Baldrige told reporters that before sanctions could be lifted, he would expect a three-month test period to verify that dumping has ended.

Record Low

Calls for new measures to promote growth of Japan’s domestic economy have been spurred both by friction with the United States and the soaring value of the yen, which eats into Japanese exporters’ profits.

The dollar on Tuesday closed at 145.65 yen, setting a record low for the second day in a row on the Tokyo Foreign Exchange Market. Its decline of 0.55 yen, however, was far less than Monday, when it lost 2.80 yen, or 1.9% of its value.

In New York, after Citibank announced an increase in its prime interest rate to 7.75% from 7.5%, the dollar rose against the yen, closing at 146.45 after having closed Monday at 145.85.

According to officials present at a conversation between Nakasone and Nobuo Matsunaga, Japan’s ambassador to the United States, the ambassador advised the prime minister that, rather than finding fault with the manner in which the United States decided to impose the penalty tariffs, Japan should move as quickly as possible to persuade Washington to withdraw them.

The officials did not spell out what actions the ambassador may have proposed. He was called home to help Nakasone prepare for the American trip.

Both overall measures to stimulate domestic growth and restructure Japan’s export-prone industries and action to solve individual trade disputes with the United States are needed urgently, the ambassador said.

“It is too late to solve the problem as an economic issue. The time has come to tackle it as a political one,” Matsunaga was reported as telling Nakasone.

Sharp Response

Criticism of Japan has reached a new level in the United States, the envoy said, adding that “allowing the cracks which now exist in U.S.-Japan relations to continue to exist is not desirable.”

Hajime Tamura, minister of international trade and industry, meanwhile, declared that the United States has “no reason to blame Japan alone” for troubles in semiconductor trade.

“We must not be a ‘yes man.’ If they get defiant, we will be defiant,” Tamura said in answer to a Socialist member of Parliament as Nakasone looked on.

On Saturday, Tamura threatened to “consider” abolishing all or part of the U.S.-Japanese semiconductor agreement, signed last Sept. 2, if the United States goes ahead with plans to implement the penalty tariffs on April 17.

Tamura complained that American semiconductor makers “lack zeal” in trying to sell in Japan. He did not elaborate, but both officials of the Ministry of International Trade and Industry and Japanese electronics executives have criticized American firms for failing to join an import-promotion organization established under the U.S.-Japanese agreement. They also have complained that U.S. semiconductor makers fail to tailor products to meet the needs of Japanese users.

Meetings Scheduled

In Washington, the State Department announced that Under Secretary Michael Armacost, the department’s third-ranking official, will visit Tokyo next week for “regularly scheduled annual talks” with the Japanese Foreign Ministry.

State Department spokeswoman Phyllis Oakley said Armacost’s meetings next Monday through Wednesday were “not directly related to U.S.-Japanese trade relations.” But she said the growing trade dispute between the two countries certainly would be discussed.

Semiconductors, also called chips, are tiny integrated circuits used in computers and other electronic products. Reagan ordered the penalty tariffs on Friday, charging that Japan had not carried out promises to increase purchases of American semiconductors and stop dumping in third-country markets in Asia.

Tamura told Parliament that Japan’s failure to prop up domestic growth had combined with Japan’s $58.6-billion bilateral surplus and American fears “over its competitiveness in high technology and semiconductors” to produce “irritation” against Japan. He reiterated that Japan had “taken all possible measures” to carry out the semiconductor agreement.