THE VENICE SUMMIT : President Lifts $51 Million of Japan Tariffs

Times Staff Writers

President Reagan, moving to ease U.S.-Japanese trade tensions, on Monday lifted $51 million of the $300 million in sanctions he imposed against Japanese imports six weeks ago.

The move, announced after a meeting here between Reagan and Japanese Prime Minister Yasuhiro Nakasone, came in response to Tokyo's efforts to comply with a wide range of U.S. political and economic demands in addition to the concerns over semiconductor trade that triggered the sanctions.

Cool Reaction

Japanese officials, however, reacted coolly to the U.S. action, and the reaction from U.S. congressional and industry leaders was mixed.

Administration officials in Venice for the 13th economic summit said the United States will lift the 100% tariff on 20-inch color television sets but retain tariffs on other Japanese products, ranging from television sets of other sizes and certain power tools to high-powered personal computers.

However, a Commerce Department spokeswoman in Washington said the official list of products that will be removed from the sanctions list has not yet been determined. She said that 18- and 19-inch color television sets, as well as power hand tools, might be dropped from the list.

If the lifting of tariffs is limited to 20-inch color TVs, it is unclear what impact, if any, the decision would have. The U.S. government earlier identified five Japanese makers of televisions it said would be hurt by punitive duties on 18-, 19- and 20-inch color TVs. However, on Monday, each of those companies said it had not been affected by the imposition of sanctions on 20-inch televisions because such sets are produced in the United States.

Thus, the companies said, the lifting of the tariffs would not make any difference to them except as a symbolic gesture.

In fact, the sanctions, affecting only a minute portion of Japan's nearly $80 billion in annual exports to the United States, have been seen as primarily symbolic--a view that was reinforced Monday.

Reagan imposed the tariffs April 17 in retaliation for Japan's failure to enforce a semiconductor trade agreement that sought to end dumping of computer chips and bolster sales of U.S.-made chips in Japan.

On Monday, the President cited improved Japanese compliance with the trade accord, but the partial lifting of the sanctions also appeared to be prompted by his desire to smooth over relations with Nakasone. Reagan told Nakasone of the decision during their 40-minute meeting here Monday.

Reward 'for Their Effort'

Reagan later said: "We have to recognize that there are people in Japan, like Prime Minister Nakasone, who have worked very hard, and we think that they ought to be rewarded for their effort."

White House Chief of Staff Howard H. Baker Jr., in a briefing for reporters, said, "The commercial and the foreign policy relationship between the United States and Japan is enormously important and the President, I'm sure, took all factors into account as he reached this decision to have a partial lifting of sanctions."

Japanese officials here contended that the President should have eliminated all the tariffs. Hajime Tamura, Japan's minister of international trade and industry, said he appreciated Reagan's move "to some extent" but added that Tokyo believes "there is no longer any ground for maintaining the measures."

Tamura added, "The Japanese government strongly expects . . . an early and total lifting of the measures."

But even the Japanese have acknowledged that little progress has been made on the part of the pact that calls for increased access to Japan's chip markets for foreign producers. They contend, however, that dumping of computer chips--that is, selling below fair market value--has virtually been halted.

In this area, White House officials also said that progress has been made and called the partial lifting of sanctions an "incentive" for further compliance.

Administration officials said Japan has helped boost the price of sophisticated computer memory chips in Southeast Asia by about 63%, but they said that Japanese chips still are being dumped at prices 15% below fair market values in countries other than the United States and Japan. The partial lifting of sanctions, White House officials said, was "in proportion" to these Japanese efforts.

"The President is saying (to the Japanese) that 'we're offering you an incentive,' " Baker said. "If (the Japanese) continue to stop the dumping of semiconductors, (they) can expect that there'll be continuing relief from the sanctions that were imposed about six weeks ago."

Industry trade groups said they support the partial lifting of the sanctions. The Semiconductor Industry Assn., which fought for the trade agreement and then for sanctions when it appeared the pact was being violated, called Monday's move a "good-will gesture" that might encourage further compliance.

"We look forward to the day when the trade sanctions are completely lifted and the trade agreement is working, resulting in improved access to Japan's market and elimination of dumping in all world markets," said SIA President Andrew A. Procassini.

A spokesman for U.S. Trade Representative Clayton K. Yeutter, who, sources said, was opposed to lifting the sanctions when the issue was discussed by the Cabinet last week, said Yeutter supports Reagan's decision. "He believes," said the spokesman, "that there is no reason to continue sanctions designed to offset damage that is no longer occurring."

Congressional reaction was mixed. In a statement, Senate Minority Leader Bob Dole (R-Kan.) said: "The President's action is very limited, and it makes sense. The sanctions were supposed to be an inducement for compliance, and there's nothing wrong with having a carrot as well as a stick."

Others agreed, calling the President's move a "measured" response.

But some in Washington, including Sen. John C. Danforth (R-Mo.), the ranking minority member of the Senate Finance trade subcommittee and a leader on trade policy, called the action premature. Danforth said, "Dumping is dumping regardless of the margin.

"Because of our longstanding hesitation to do anything about Japanese barriers and our alacrity in removing these sanctions," Danforth said, "the Japanese will view this as a return to business as usual."

Wilson Criticized Decision

Sen. Pete Wilson (R-Calif.) had pushed for tough treatment of Japanese on the chip-dumping issue. He criticized Reagan's decision in a prepared statement:

"Just as retaliation was necessary to convince the Japanese that they could not get away with continued unfair trading practices, I think that it is a serious mistake to relieve the pressure on them. Pressure should not be removed before they have fully complied with their own agreement. . . . We have got to convince them that we are serious."

In Tokyo this morning, Japanese business leaders welcomed the partial lifting of sanctions. "Though it is a very small part (of the sanctions) . . . we welcome it at this time as we see that efforts of the Japanese side were appreciated," said Iwao Ojima, managing director of the Electronic Industries Assn. of Japan.

Takuma Yamamoto, president of Fujitsu, the country's largest computer maker and a major producer of semiconductors, said he was pleased at the decision, Kyodo News Service reported.

Kyodo also quoted an unidentified semiconductor executive as pledging that the industry would redouble efforts to boost the share of U.S. chips in the world market in a move to pressure U.S. officials to lift all the sanctions.

White House officials said the sanctions will be further eased as Japan demonstrates improved compliance with the anti-dumping agreement, but Reagan warned that he could reimpose the tariffs if Japanese firms do not continue to narrow the gap between actual prices for chips and fair-market values as specified in last year's agreement.

On other economic matters, U.S. and West German officials sparred over whether Reagan pressed West German Chancellor Helmut Kohl on the issue of boosting the German domestic economy to help ease massive worldwide trade imbalances.

While White House Chief of Staff Baker said Reagan "mentioned to Chancellor Kohl that he hoped that the German government would continue to improve the level of economic activity in his country," a spokesman for the West German government said the issue of domestic economic growth "was not a subject" at the meeting between Reagan and Kohl.

Tom Redburn reported from Venice and Donna K. H. Walters reported from Los Angeles. Also contributing to this report was Oswald Johnston in Washington.

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