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Japan Promises $20 Billion to Ease Third World Debt

Times Staff Writers

Japanese officials, seeking to ease strains with the United States as Prime Minister Yasuhiro Nakasone arrived in Washington for two days of talks with President Reagan, said Wednesday that Japan will provide $20 billion in extra funds over the next three years to the World Bank for loans to developing countries.

Nakasone, fighting tumbling political fortunes at home and tumultuous trade problems abroad, sent Foreign Minister Tadashi Kuranari ahead on a commercial flight to make the announcement to Secretary of State George P. Shultz.

Japanese officials hope their new support for the World Bank, while not directly addressing any of the outstanding trade disputes between their nation and the United States, will meet criticism in this country that Japan has refused to direct much of its trade surplus toward solving Third World debt problems.

Gives Shultz Proposals

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Kuranari also gave Shultz a rundown on the steps Japan is proposing to ease six individual trade disputes with the United States--four of which went at least part of the way toward meeting American demands.

The Japanese foreign minister also told Shultz that Japan wants the United States to withdraw as quickly as possible the unprecedented tariffs imposed by Reagan earlier this month on certain Japanese television sets, portable computers and power tools in retaliation for Japan’s alleged failure to uphold an agreement on semiconductor trade.

But senior Administration officials, while emphasizing the depth of the U.S.-Japanese alliance, held out little hope that Reagan will lift the tariffs during Nakasone’s visit.

And just before the prime minister arrived, the House delivered a new blow to Japan by approving a measure intended to force that nation and others running large trade surpluses with the United States to reduce those surpluses or face retaliation.

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Reagan Defends Tariffs

Reagan had lobbied against the measure, sponsored by Rep. Richard A. Gephardt (D-Mo.). The tariffs he had placed on Japanese goods had been designed in part to defuse congressional support for protectionist steps such as the Gephardt amendment.

White House spokesman Marlin Fitzwater defended Reagan’s tariffs as “fair but firm” and said: “These sanctions have made their impact in Japanese markets and among the people who are involved in commercial activities in Japan in a way that has not been made before.”

Kuranari, announcing what he called “Japanese contributions to international society,” told Shultz that Japan would provide the extra $20 billion to a special fund the World Bank set up last December with $10 billion in Japanese funds. In addition, he said, Japan will increase aid directly to the least-developed countries of Africa.

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He also enumerated measures Japan will take concerning American complaints about access to bidding for contracts involving a new $7-billion airport near Osaka, supercomputer purchases, chocolate tariffs, agricultural imports, coal purchases and a new international telecommunications company.

Promises to Hire Consultants

Procurement procedures will be clarified for both airport contracts and supercomputer purchases by universities and Japanese government agencies, Kuranari said. Foreign consultants also will be used by the airport corporation, he added.

Kuranari proposed that the two governments hold consultations in May to hammer out details on an agreement on supercomputer purchases, including the practice of offering discounts to universities.

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Japan, he said, will lower its tariff on chocolate imports--a long-standing American complaint--from 20% to 10% next April 1.

On U.S. demands for a lifting of barriers against imports of agricultural products, however, Kuranari offered no concessions. He said only that Japan would agree to discuss all of its agricultural policies, including its ban on the import of rice, in the present round of multinational trade negotiations in Uruguay.

On Japanese purchases of U.S. coking coal, Kuranari insisted that U.S. firms should reduce their prices to a “reasonable level” in line with international market prices.

Japan’s Ministry of Posts and Telecommunications, he said, has withdrawn its objections to the laying of a trans-Pacific optical fiber cable by a new international telephone company in which U.S. and British firms will be among the major stockholders.

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The new firm seeks to compete against Japan’s only international phone company.

Shultz told Kuranari that Nakasone should spell out, in his meeting today with Reagan, all the details of a program to expand Japan’s domestic demand. In particular, the President will want to know how big a supplemental budget Japan is prepared to adopt this year and how much taxes will be reduced, a Foreign Ministry official told reporters traveling with Nakasone.

“The more specific an explanation (by Nakasone), the more meaningful it will be,” the Japanese diplomat quoted Shultz as telling Kuranari.

Shultz, the official said, made no specific comment to Kuranari’s enumeration of Japanese steps on the individual trade issues. The disputes have arisen as part of American efforts to gain greater access to the Japanese market to help offset a trade deficit that reached $58.6 billion last year.

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A senior Administration official, speaking with reporters at the White House in a preview of the meetings with Nakasone, said: “We don’t expect to resolve all our problems in a single visit.”

Nakasone’s Difficulties

Fitzwater said Reagan was “quite aware” that Nakasone was suffering political reversals at home just as the United States was taking action against Japanese trade practices. According to public opinion polls, the prime minister’s popularity is 25%, its lowest point since he took office 4 1/2 years ago, primarily because of his advocacy of a new 5% value-added sales tax.

But the senior official, speaking on the condition that he not be named, asserted that he did not believe Nakasone’s “political problems at home are affecting us particularly.”

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