Japan Rebuff Pitch by U.S. on Farm Products : Agriculture Minister Says Ban on Rice, Limits on Beef, Oranges Will Remain

Agriculture Secretary Richard E. Lyng was rebuffed Monday in a bid to persuade Japan to open its market to American rice, beef, oranges and other food products.

Shortly afterward, U.S. Trade Representative Clayton K. Yeutter said the United States “will aggressively pursue” a solution to the dispute over Japan’s imports of agricultural products.

Lyng, with Yeutter sitting in, made the first official U.S. request for Japan to lift its ban on imports of rice, the most politically sacrosanct of the 22 agricultural items on Japan’s protected list. The request was made at a meeting with Mutsuki Kato, Japan’s agriculture minister.

Lyng urged Kato to set up a system of quotas under which specific amounts of rice could be imported from the United States.

He also reiterated long-standing demands for the removal of quotas on imports of beef and oranges, as well as on 12 other food products of lesser political impact, including tomato paste, peanuts and processed cheese.

Kato rejected all the requests. He told Lyng and Yeutter that Japan will not lift its ban on imports of rice because of rice’s preeminence in overall agricultural production and because it has “strong roots in Japanese culture.”

Moreover, he said, Japan will insist on retaining its quotas on the other products.

He promised, however, to discuss increasing beef and orange quotas after a bilateral agreement on those products expires next March 31. And he also agreed to allow Japan’s rice policy to be put on the agenda for the multinational trade talks that will take place in Uruguay under the General Agreement on Tariffs and Trade. But he said that agreement to discuss the ban will not lead to a lifting of it.

Will Pursue Solutions

Monday’s meeting, which Lyng said accomplished nothing, began a series of last-minute consultations before Prime Minister Yasuhiro Nakasone’s scheduled April 29 visit to Washington. Japanese officials hope the visit will avert a crisis in the mounting economic difficulties between the two countries.

Yeutter issued his warning about Washington’s intent to “aggressively pursue” solutions to disputes with Japan in a speech Monday night to a conference of 80 prominent American and Japanese businessmen, scholars, politicians and journalists.

“Individual trade issues are threatening to overshadow our long relationship as friends and allies,” Yeutter said. “This must not be allowed to happen.”

He cited a dispute over semiconductors and added that, “with a $170-billion trade deficit, we will aggressively pursue solutions in other disputes, too.” He listed these as agricultural trade, contracts for American companies to take part in the construction of a new Osaka airport, supercomputers, telecommunications and auto parts.

Yeutter likened the present situation to an earlier dispute with the European Economic Community--sanctions were ordered in January, but then withdrawn--and his remarks were taken as a veiled threat of retaliation against Japan.

He acknowledged that approval of the U.S. requests on all the matters at issue “would have only a modest impact on our massive trade imbalance.” But solving the disputes, he added, “will be worth the effort in terms of calming our relationship.”

Yeutter emphasized that it is important for Japan to carry out the recommendations made a year ago by a governmental commission headed by Haruo Maekawa, a former governor of the Bank of Japan. Maekawa’s report urged a thorough reform of Japan’s economy and Prime Minister Nakasone told President Reagan a year ago that Japan would do it. Nakasone promised to end Japanese industry’s dependence on exports and expand domestic demand.

Failure to carry out the recommendations will present “a bleak alternative,” Yeutter warned, and added: “If Japan does not expand its imports, it will soon find it difficult to expand exports. This could lead the Japanese economy into recession, a development that would harm both Japan and its trading partners.”

In a meeting with Foreign Minister Tadashi Kuranari, Yeutter complained that Japan had done nothing in the past year to implement the Maekawa report or to expand demand at home, both issues of “supreme importance” to Washington.

“This is not the time for debate,” he told Kuranari. “It is the time for action.”

In his speech, Yeutter said that Japan imports only 7% of the exports of developing nations’ manufactured products, compared with 63% taken by the United States, and he said that Japan must expand its purchases of such products from the developing nations as well as from the United States.

“Japan’s most important contribution to the international trading system would be to commit itself as a nation to import with vigor, just as it has exported with vigor,” Yeutter said.

He said the United States, too, must make adjustments, “which may be economically painful and politically unpopular,” to do its part in reducing its trade deficit with Japan, which reached $58.6 billion last year.

Slashing the U.S. budget deficit and “increasing our competitiveness,” he said, are essential to reducing the American trade deficit.

“President Reagan understands that our trade problems go beyond the unfair practices of our trading partners,” he said.

He called on Japan to accept the same pain of structural adjustment that U.S. steel and auto companies have felt as plants are closed or relocated.

Kuranari told Yeutter that Japan is preparing a new policy aimed at expanding domestic demand, and he said that Nakasone will explain this policy in Washington. He also promised further action to restructure Japan’s industry.

Nakasone, he said, will also announce a new move to permit American companies to take part in the construction of the Osaka airport.