Easing of Trade Tensions With Japan Reported

After years of bellicose economic relations, Japan and America appear to have struck an armistice in their trade war, with U.S. Secretary of Commerce C. William Verity Jr. declaring Monday that the “intractable” problems of the past have been largely resolved.

In sharp contrast with the threatening overtones of previous visits by Commerce Department chiefs, including Verity’s first Japan trip last November, his message was a conciliatory one as he led a presidential trade mission to Tokyo. Verity reassured Japanese officials that the United States’ new Omnibus Trade Act, which specifies mandatory sanctions against countries engaged in unfair trade practices, had been purged of protectionist provisions and would be used with discretion.

Assuaging Japanese fears about anti-Japan sentiments in Congress and the possible repercussions of a Democratic victory in the presidential election, Verity said he thinks that whoever succeeds President Reagan in January “will administer the trade bill in such a way that you have no fear of retaliation” as long as U.S. trade laws and the General Agreement on Tariffs and Trade “are not abridged.”

Progress Praised

Verity’s visit coincided with an unusual lull in the trade dispute, which has centered on Japan’s booming trade surplus with the United States and the rest of the world, its predilection for aggressive exports and its stubborn resistance to imports. For the first time in recent memory, there are no major outstanding issues between U.S. and Japanese trade negotiators.

Speaking Monday before the Japan National Press Club, Verity praised the progress made since his visit 10 months ago: An agreement opening Japan’s public works market now allows foreign firms to bid on up to $17 billion in contracts, for example, and a long-festering bilateral dispute over beef and citrus imports has been defused.

“Many of those so-called intractable problems that divided us,” Verity said, “have been resolved.”

Japan’s massive trade surplus--”the most visible greatest source of friction”--is declining, and if the trend continues, Verity said, the annual bilateral trade imbalance will have shrunk $7 billion to $10 billion by the end of the year. Last year, Japan’s trade surplus with the United States was $52.14 billion.

Indeed, figures released by the Ministry of Finance on Monday suggested that the trade picture is continuing to improve. Although Japan’s global trade surplus showed its first year-to-year rise in 15 months in July with a surge in exports, it was back down again in August, declining in dollar terms by 3.9% to $4.94 billion from $5.15 billion in August, 1987.

Japan’s bilateral surplus with the United States for August fell by 12.9% from a year earlier, to $3.25 billion from $3.72 billion. Although exports to the United States rose by 9%, the increase was canceled out by a 39.3% lurch in imports from the United States over the level of August last year.

Arcane Distribution

Minor disappointments persist, however, in such areas as semiconductor trade, Verity said. Sales of U.S. chips in Japan are growing, but the total market has been expanding and America’s share remains static at about 10%--far short of the 20% target set by U.S. officials.

If there was a theme to Verity’s trade mission, it would have to be described as a cautious attack on the arcane distribution system that makes marketing of foreign goods extremely difficult in Japan and adds layers of extra costs to the domestic consumer.