Japan Warned of U.S. Trade Retaliation : Takeshita Proposal on Construction Firms Called Inadequate

Japanese Prime Minister Noboru Takeshita on Thursday renewed his pledge to open his nation’s markets to foreign goods and participation by American firms, but a key U.S. official signaled clear disappointment with the overture and warned of retaliation if concrete progress is not made on one disputed issue.

U.S. Trade Representative Clayton K. Yeutter said that a proposal presented by Takeshita for improving U.S. construction firms’ access to Japanese public works projects--a key issue in U.S.-Japan trade tensions--”does not meet our needs.”

With the new prime minister promising only to renew negotiations on Japan’s restrictive bidding procedures, “we certainly are a ways apart and we’ll have to make our own judgment whether retaliatory action will be needed to achieve that objective,” Yeutter said in a radio interview.

In addition, Senate Majority Leader Robert C. Byrd (D-W.Va.) warned Takeshita in a private meeting that Japan’s large trade surplus with the United States is a “dark spot” in their relations that must be remedied, Japanese officials said.

Byrd, in a statement issued by his office, proposed that the two countries explore the possibility of a “free trade area” that would eliminate import barriers.

Yeutter’s message came as Takeshita concluded his first visit to the United States since assuming office Nov. 6. The three-day trip, intended to ease worsening friction between the nations, produced for Japan a U.S. commitment to help stabilize the value of the sagging dollar, which would make Japanese goods more competitive in world markets. But it did not allay concerns of U.S. officials that Japan’s promises to ease the bilateral trade imbalance would not lead to action.

Legislation pending in Congress would mandate retaliatory sanctions against nations that maintain barriers to U.S. imports and carry large trade surpluses with the United States. The Reagan Administration has declared its opposition to such protectionist measures but stressed that preventing them may depend on cooperation by trading partners in boosting their imports of U.S. goods and their business with American companies.

Takeshita, who is to leave Washington today ( for a two-day visit to Toronto, told a gathering at the National Press Club on Thursday that Japan is sincere in its desire to improve trade relations but said that patience will be needed to find solutions.

“We have undertaken to make Japan a nation which contributes more to the world,” he said. “We are embarking on this course of our own will and initiative, and not merely responding to the requests of others.”

With the ever-increasing scale and speed of exchanges of “people, goods, money and ideas” between the nations, he said, there is the threat of “problems . . . that cannot be solved by conventional ways of thinking.”

” . . . Our ability to communicate with each other sometimes lags behind the extraordinary speed with which our two countries are interacting,” he said. “When communication lags, there can be misunderstandings and even prejudice.”

Takeshita Optimistic

Takeshita, nonetheless, said he is optimistic. “To those people . . . who view our relationship as confrontational and to those . . . who worry about the future course of Japan-U.S. relations, I have only this to say: Japan is fully aware that the prosperity of the United States constitutes the very foundation of our own prosperity.”

“Our relationship is much broader and deeper than what you see on the surface,” he said, and will “long endure.”

Takeshita said that he hopes the Reagan Administration is successful in blocking any trade sanctions that Congress might seek to impose on Japan. Congress has approved a one-year ban on participation by Japanese firms in federally financed projects in the United States.

However, Yeutter said Japan must fully open its public works projects to participation by U.S. firms, few of which have been able to win government designation for eligibility to bid on jobs.

‘Hard Negotiations Ahead’

“Our preliminary judgment is that (Takeshita’s offer to negotiate the issue) does not meet our needs and that we’re going to have some tough, hard negotiations ahead,” he said.

One positive note, he said, is the “indications (that) the prime minister definitely does want to try to resolve that issue with us.”

Yeutter also lashed out at a Japanese farm cooperative that has threatened to cut its U.S. grain imports to protest U.S. trade demands.

If the Japanese government could not prevent that action, “this would be distressing indeed for us and would likely provoke additional responses from us.”

Byrd, who met for 40 minutes with Takeshita, suggested in his statement that both nations “initiate immediate studies . . . to examine the advantages and disadvantages of opening negotiations to establish a free-trade area between the two nations.”

Byrd noted that in the last 10 years the United States’ deficit with Japan has expanded from $9.7 billion to $60 billion even as Japanese leaders repeatedly promised improvements.

In a letter to Takeshita released by his office in Missouri, Republican Sen. John C. Danforth, an author of one trade bill in Congress, demanded greater sales of U.S. beef, silicon chips and other goods in Japan.

Gives Few Details

Takeshita did not specify how he intends to transform Japan into a nation that contributes more to the world economy other than to mention policies established by his predecessor, Yasuhiro Nakasone. Those policies call for more foreign aid, defense spending, and transformation of the export giant into a nation that is “strong in imports.”

In the first 11 months of 1987, he said, Japan increased its purchases of manufactured imports by 23.7%--a trend he said he would encourage by improving access to Japan’s markets and carrying out adjustments “to harmonize our economic structure to the international economy.”

But, replying to a question, Takeshita said that the Japanese people “move at a slow tempo,” and trying to open markets rapidly “creates irritation among them.”

He also said that the Japanese “were not happy to see Toshiba products smashed to bits by a sledgehammer” by a U.S. politician--a reference to a scene shown on American television in the wake of disclosures last spring that a subsidiary of the giant electronics firm had sold militarily sensitive equipment to the Soviet Union.

He urged Congress to remove sanctions it has placed on Toshiba products, saying that the Japanese government already has taken legal and administrative measures to prevent a recurrence of illegal diversion of high technology to Communist countries.

Takeshita refused to give direct answers to questions about whether Japan would lift its import quotas on beef when a four-year U.S.-Japan trade agreement expires March 31 and whether Japan would import natural gas from Alaska.