Curb Sensitive Exports, Japan Told : U.S. Pressing Tokyo to Restrict High-Tech Sales to Soviets

The Reagan Administration, trying to head off stiff penalties against Toshiba Corp. proposed by Congress for the Japanese company’s sale of submarine technology to the Soviet Union, said Thursday that it will insist that Japan establish a strict new security system to control its exports.

“The punishment of Toshiba is not nearly as important as having the whole government of Japan shape up its export control and licensing,” Commerce Secretary Malcolm Baldrige told reporters. He said it should be up to Japan, not the United States, to punish one of its companies.

Strong U.S. Stand

It is the strongest stand to date by the Administration in response to the Toshiba sale, which “could be costly in lives as well as dollars,” Baldrige said in announcing the U.S. demand.

But the Administration action falls far short of penalties sought by the Senate, which voted earlier this month to bar Toshiba Corp. and Kongsberg Vaapenfabrikk, a Norwegian firm involved in the sale, from selling any products in America for two to five years. An even tougher measure pending in the House would permanently ban the companies from the U.S. market.

Toshiba Machine Co., a Toshiba subsidiary, sold to the Soviets sophisticated milling machines that allowed them to produce propellers that operate quietly, making their submarines more difficult to detect. The sale, which took place in 1983 and 1984, netted Toshiba and Kongsberg Vaapenfabrikk a total profit of about $17 million.

And it gave the Soviets access to technology that is similar--if not identical--to that which the United States was using to manufacture its submarine propellers, reducing an American undersea advantage.

The Administration’s position in the Toshiba case demonstrates the fine line it must walk between responding to growing domestic demands for action on trade violations and trying to improve strained economic relations with Japan and other leading trading partners.

Administration officials contend that rigid trade restrictions--such as those proposed by Congress to punish Toshiba--will harm the international economy. However, they acknowledged that some U.S. action had to be taken in the Toshiba case to discourage attempts by other nations to make such sales.

“Japan will simply have to put up the kind of system that safeguards against future diversions,” Baldrige said, adding that the Administration wants Japan to adopt strict rules on licensing of technology and tougher penalties for violations to ensure that “this doesn’t happen again.”

Japan a Weak Link

The United States, Japan and 14 other nations belong to a Coordinating Committee for Export Control, which develops common policies on exports of high technology to communist nations. But Baldrige said Japan has been one of the “weaker links” among the major free industrial nations in controlling technology shipments to communist countries.

The government of Japan has just two employees working on the issue, in contrast to hundreds in the United States, he noted. Baldrige, suggesting that the Japanese consult with Americans about ways to improve security, said: “We want them to sit down with us. We have a great many experts.”

The commerce secretary, turning to a more optimistic note for U.S.-Japan trade relations, said an arrangement to stop Japan from dumping semiconductors on the market at below-cost prices is “progressing very well.”

Baldrige said Japan is “making the right moves” in response to punitive tariffs of 100% on $300-million worth of Japanese products imposed by the United States because of the semiconductor violations. If the semiconductor prices reach 100% of cost, a part of the sanctions, applying to $135 million in Japanese goods, might be lifted, he said.

No Market Gains

However, Baldrige said, no progress has been made on improving U.S. semiconductor firms’ access to Japanese markets.

The Senate, meanwhile, continued work on its massive trade bill, which contains many provisions that the Administration opposes.

The parts of the bill that the Administration finds most objectionable are provisions that could force automatic retaliation against other countries in trade disputes. Baldrige warned that such action could touch off trade wars in which the United States may lose the most.