Cabinet Panel May Review Items Targeted for Tariffs

So sensitive are the issues involved in imposing punitive tariffs on $300-million worth of Japanese imports that Cabinet officials may review the detailed final list of products before it goes to President Reagan for his signature on Friday.

At the close of a two-day hearing on the tariffs Tuesday, a panel of more than a dozen representatives from several government agencies began the arduous task of compiling its recommendations to U.S. Trade Representative Clayton K. Yeutter and Commerce Secretary Malcolm Baldrige.

Trade officials said they were told that the Cabinet-level Economic Policy Committee, which last month recommended the sanctions, also would consider those final recommendations at its meeting today. The committee, headed by James A. Baker III, secretary of the Treasury, includes the secretaries of the State, Commerce and Labor departments, as well as the director of the Office of Management and Budget.

When President Reagan announced the sanctions on March 27, the Administration released a list of 17 broad product categories representing $1.9-billion worth of Japanese imports a year as potential targets for the 100% tariffs. The committee that conducted the hearings, listening to more than 90 witnesses in two days, must pare the list down to $300-million worth.

The government says that that amount is equal to the injury sustained by the U.S. semiconductor industry in the eight months since the two countries signed a trade agreement on microchips.

The decision to impose sanctions came in response to what the U.S. has called repeated failure by Japan to implement the trade accord, which called for an end to worldwide product dumping and increased access to Japan markets for American chip makers. The action also symbolizes increasing frustrations in industry and Congress over wider-ranging trade friction with Japan.

Panel members said that, in choosing products, they would have to take into consideration renewed threats of counteraction by Japan. The signal from Tokyo late Monday, where Japanese trade officials said they might draw up a list of American products for possible retaliation, adds to the already complicated task facing the panel.

“We don’t know for sure where they stand on retaliation, but it’s one more thing we’ll have to take into account,” one trade official said.

The Administration is trying to avoid imposing tariffs that would place a financial burden on U.S. consumers. It is also trying to pinpoint products containing semiconductors and products made by the Japanese companies it believes to be the primary violators of the agreement.

“The first question we face,” another trade official on the panel said, “is the extent to which the (final) list contains semiconductor-bearing products.”

Those kinds of products, including electrical instrumentation and central processing units, monitors and hard disk drives for computers, would more narrowly penalize the offending companies than some other categories on the list. But leaving them on the list could also create problems for many U.S. companies that use those components in their own products.

“We recognize any sort of sanctions will involve many gray-area decisions and that nothing is cut and dried,” one of the panel members said. “These products have international markets, and you can’t sneeze in international markets without giving someone else a cold.”

Neil Vander Dusen, president of Sony Corp. of America, on Tuesday appealed to the panel to delete categories that would most especially harm Sony. Sony has extensive manufacturing operations in the United States and has actively worked to increase sales of U.S. products in Japan, he said.

Sources said the black-and-white television category in the products list would probably be deleted or amended to exclude Sony Watchman sets from the tariffs, and computer floppy disks, also made by Sony, would probably be spared. But Sony could wind up having to pay tariffs on its imports of color televisions.

Officials of Japanese film manufacturer Fuji, which also makes floppy disks, said on Tuesday they were confident that at least some kinds of floppy disks would be dropped from the list and that they were optimistic about having commercial films exempted.