Japanese Risk Trade Reprisals Over Low Pricing, Verity Says : Threatens Massive ‘Anti-Dumping’ Measures by U.S.

Commerce Secretary C. William Verity said today that Japan’s reluctance to match the rising yen with higher export prices is thwarting improvements in the U.S. trade deficit and could provoke U.S. retaliatory duties.

Verity suggested that the pricing practices, if continued, could lead to the wholesale filing of “anti-dumping” cases against Japanese products. Dumping is the illegal sale of items at below market values and can result in tariffs equal to the margin by which the products are underpriced.

“As the greatest beneficiary of the trading system, Japan must accept more responsibility to correct trade imbalances,” Verity told the U.S. Chamber of Commerce before leaving for a three-day visit to Japan.

Dollar Loses 40%

The dollar has fallen more than 40% against the Japanese yen since mid-1985. But Verity said that Japanese companies have failed to raise their prices by a comparable degree, preferring instead to take smaller profits to retain their share of U.S. markets.

“By failing to price in line with the appreciated yen . . . Japanese firms are impeding the power of currency adjustments to help correct our trade imbalance,” Verity said.

The United States last year amassed a record $156.2 billion trade deficit while Japan posted an $82.7 billion trade surplus. Such an imbalance “is simply not sustainable,” Verity said.

Wants to Impart Urgency

When he meets with Japanese leaders, Verity said, “I hope to impart a sense of urgency on trade and economic issues. The credibility of the government of Japan has suffered in the wake of continued inaction and a series of trade ‘packages’ that failed to produce results.”

By failing to raise prices to match the devalued dollar and stronger yen, Japanese companies are in effect dumping a wide range of products in the United States, Verity suggested.

“They are running the increased risk that additional anti-dumping cases will be brought against them in response,” he said.

Reagan, Baker in ‘Unison’

Verity will be in Tokyo through Saturday, his first trip out of the country since he was sworn in as commerce secretary last month.

He also said today that President Reagan and Treasury Secretary James A. Baker III are now speaking “in unison” on the subject of the U.S. dollar, despite apparent contradictory statements.

Reagan said last week that the U.S. dollar had fallen enough and should fall no further, while in earlier comments Baker suggested the Administration would let it keep falling rather than risk a recession with steps to prop it up.

“I hope these two speak in unison,” Verity said. “They have been speaking in unison most of the time. And I think currently they are speaking in unison.”