Kaifu Will Try to Convince Bush That Trade Progress Is Being Made : Summit: Japan’s leader cites gains on cutting the surplus and opening markets. But he offers no hint of concessions.

Prime Minister Toshiki Kaifu said Wednesday he will try to convince President Bush at their Palm Springs summit that Japan is making progress both in opening its markets and in cutting its trade surplus with the United States.

In a nationally televised news conference after naming a new Cabinet, Kaifu offered no hint of new concessions, despite warnings from Washington that a breakthrough in solving economic disputes is needed before relations “get out of hand.”

A senior Japanese diplomat, speaking not for attribution, said privately that what Kaifu wants and needs most in talks at Palm Springs on Friday and Saturday is reaffirmation from Bush that he considers Japan an important ally and a “global partner” of the United States.

Putting economic frictions into a framework of that larger--and more important--relationship will be Kaifu’s main goal, he said.

Kaifu himself complained to reporters that “only negative, dark aspects of U.S.-Japan relations are being focused upon. But Japan and the United States have a partnership. We should emphasize our points of commonality and quietly solve our points of difference.”

Asked if he thinks relations are deteriorating, he replied: “I do not even think of a worsening of U.S.-Japan relations. We are trying to improve relations by carrying out talks on economic issues. . . . It is precisely because we consider U.S.-Japan relations important that we want to make efforts to prevent a worsening.”

He acknowledged, however, that solving frictions has become “urgent” and stressed that Japan regards its ties with Washington as the axis of its entire global diplomacy.

The Japanese diplomat said Kaifu needs Bush’s help to counteract hostility that is spreading against Japan in the United States. American criticism has spread from the longstanding bilateral trade imbalance to Japanese investment, to Japanese financial power, to Japanese culture and even to a questioning of whether Japan is a true democracy.

Congress members advocating managed trade have latched on to so-called revisionist scholars’ arguments that Japan, as a “unique” country, cannot be treated by standard rules, the diplomat complained.

Kaifu said he must discuss with Bush “what role Japan can play and how it can coordinate its policy with the United States” now that the world is moving away from an East-West confrontation based upon military power. During the campaign for the Feb. 18 election for the lower house of Parliament, the prime minister said that Japan wants to join the United States in establishing “a new world order.”

Another diplomat, briefing reporters who will accompany Kaifu, complained that when Americans think of Japan, “the thing that comes into their minds immediately is economic problems.”

“But we have entered a world in which there are problems that the United States can no longer solve by itself. Neither can Japan alone solve them. But when the two nations get together, they can be solved,” he said, citing as examples aid to Mexico, Poland, Hungary and a multilateral assistance program for the Philippines that the United States and Japan launched last July.

Bush persuaded Kaifu to meet him during a middle-of-the-night telephone call last Friday. The call came hours after U.S. officials expressed frustration with what they called their Japanese counterparts’ lack of “political guidance” from Kaifu in pursuing talks to remove structural impediments to trade. But the prime minister told reporters that Bush raised none of the specific points that caused the frustration.

Those points included a request that Japan raise its public works spending to 10% of the gross national product within three to five years, abolish a law that protects mom-and-pop stores and revise its Anti-Monopoly Law to outlaw collusive business practices.

If the President does take up these points, Kaifu said, he would reply by proposing “further discussions on the experts level.”

He said Japan began increasing its public works spending three years ago--”even before the Structural Impediments Initiative began.” His country, he added, recognizes that its infrastructure--parks, housing, sewerage and the like--lags behind other advanced nations.

He insisted that Bush himself, both earlier this year and in the middle-of-the-night call, said he wanted to “discuss global problems, without setting an agenda.” Bush assured him, Kaifu added, that he didn’t intend “to try to make deals.”

“ ‘Let’s have a frank discussion, without setting an agenda,’ ” Kaifu quoted the President as saying.

The diplomat who briefed reporters said the two leaders are expected to “give the Structural Impediments Initiative a stimulus and a direction”--but nothing else.

Kaifu predicted that “frank discussions” he intends to have with Bush will “deepen understanding” of the measures Japan has been taking and the success that it has achieved.

As examples, he cited a continued surge in domestic demand that has eliminated reliance upon exports for growth, and a reduction of Japan’s trade surplus with the United States to $49 billion last year from a peak of nearly $60 billion in 1987.

American exports to Japan increased 14.6% last year and 58.3% of the shipments were manufactured goods, whereas Japanese exports to the United States increased by only 4%, said Taizo Watanabe, the Foreign Ministry’s spokesman.

Meanwhile, Foreign Minister Taro Nakayama said in an interview with the Japan Times that Japan must take “bold steps” in the Structural Impediments Initiative talks to prevent further deterioration of U.S.-Japan relations. But he added that “there are some things that Japan can do and other things that Japan cannot do.”

“Japan needs to say clearly to the United States what it cannot do,” he said. He added that the timing is not right to make specific commitments now.

The Japanese diplomat warned that Kaifu will be going to Palm Springs “without any preparation” and will be unable to make commitments on specific trade issues.

“You can’t expect a miracle with only four working days for preparations,” another diplomat added.

In addition to the abruptness of Bush’s invitation, political turmoil in Japan since Kaifu’s Liberal Democratic Party suffered an unprecedented defeat in an upper house election last July effectively shelved discussion of all domestic and foreign issues as the party prepared for the Feb. 18 vote.

When Kaifu met Bush last September, he promised the President that he would implement policies based upon the interests of Japanese consumers.

But the Asahi newspaper, in an editorial after the latest round of trade talks, condemned Japan for attempting “to get through the SII with the minimum possible reforms in order to protect vested interests at home.” It warned that “Japan is in danger of allowing itself to be ostracized” by the rest of the world.