Takeshita Shrugs Off U.S. Threats

Prime Minister Noboru Takeshita on Wednesday shrugged off U.S. threats of retaliation against Japan for its failure to open up its construction market further to foreign companies.

“They always say that,” Takeshita was quoted by Kyodo News Service as telling Japanese reporters.

Talks between the two sides broke down in Washington on Tuesday. Japan has offered to open up some of its public works to foreign competition, but the United States has said it did not go far enough.

“We regret this, but this doesn’t mean it’s over,” said Chief Cabinet Secretary Keizo Obuchi.

“We will keep in touch so that we can reach a final solution through efforts on both sides,” he said at a news conference.

A Reagan Administration source in Washington said Tuesday that the United States was not prepared for further discussions in the 8-month-old talks. The official, who spoke on condition of anonymity, said President Reagan has the authority to retaliate against Japan for what are considered unfair trade practices.

“That is one of the options,” the official said, adding that the White House will decide probably by the end of next week what its next step will be.

“We exhausted our current capacity to resolve the outstanding issues and are not prepared to schedule any further discussions,” the source said.

If Reagan decides that Japan has unfairly shut out foreign competition from its construction market, he could impose punitive tariffs, some as high as 100%, on selected Japanese exports to America.

Both Takeshita and his predecessor, Yasuhiro Nakasone, had pledged to drop the barriers to foreign construction firms, but their negotiators could not meet the U.S. demands.

Normally, action to press an unfair trade complaint takes up to year.

But the source said this case could take far less time because of the extensive U.S. investigation already conducted in connection with the negotiations.

The U.S. delegation was led by J. Michael Farren, deputy undersecretary of commerce for international trade. The Japanese group was headed by Peter Sato, director general of economic affairs in the Japanese Foreign Ministry.