Japan Is Warned That Sanctions Are a Possibility : Trade: If barriers are not lifted in three key areas, Bush can retaliate against Japanese imports into the U.S., Commerce Secretary Mosbacher says.

Commerce Secretary Robert A. Mosbacher warned Japan on Thursday that the imbalance in U.S. trade with Japan will be corrected one way or another, and Sen. John C. Danforth (R-Mo.) warned of sanctions, saying there is “no chance that Congress is going to throw cream puffs.”

In separate news conferences, Mosbacher and Danforth said in meetings this week with Japanese political and business leaders they sensed a new realization of the seriousness of the trade situation--that “something had to be done,” as Danforth put it.

But neither expressed any hope for an overall settlement as deadlines near for action on a series of trade negotiations.

Mosbacher complained that Japan’s trade surplus with the United States has become semi-permanent at around $50 billion a year for the last five years and added: “We must be realistic about ongoing negotiations. . . . No system can long function in a state of permanent disequilibrium. There will be corrections.”

He said unless corrections are brought about by Japan opening its markets, “our last chance to save the world trading system from serious damage” may be thrown away.

Danforth said: “This is a very important time. It would be a mistake to underestimate the seriousness with which Congress addresses the trade difficulties.”

Mosbacher disclosed that he had delivered another letter from President Bush to Prime Minister Toshiki Kaifu, reiterating “the importance and urgency” of producing a meaningful interim report by early April in negotiations to remove structural barriers to trade. Bush sent his first such letter to Kaifu on Feb. 19.

A Foreign Ministry official said Kaifu told Mosbacher that he was determined to make the talks on structural barriers succeed. “I will make the final judgment myself,” Kaifu was quoted as telling Mosbacher.

In the letter delivered to Kaifu on Thursday, Bush said solutions must be found to three complaints the United States has filed regarding Japan’s import barriers to satellites, supercomputers and forestry products, Mosbacher said. If Japan does not open its market to the three products, the President is authorized to retaliate, under the 1988 Omnibus Trade Act, against Japanese imports into the United States.

Danforth said that failure to settle the three complaints will precipitate sanctions, either by the President or Congress.

“I want to make it clear that there is no chance that Congress will throw cream puffs,” Danforth said. “Congress expects the President to act under the ’88 legislation. If the President simply refuses to act, Congress will act. I don’t have any doubts about that. Congress will insist that the grievances we have must be addressed, and if they are not addressed, then sanctions must be imposed.”

Of the three complaints that could precipitate retaliation, progress has been reported only on the one dealing with supercomputers.

Mosbacher offered contradictory evaluations of negotiations on satellites. He said he was “extremely disappointed that our satellite talks broke off without any movement,” but he also said, in answer to a question, that after meeting Shintaro Abe, an official of the ruling Liberal Democratic Party who wants to succeed Kaifu as prime minister, “I am hopeful there can be a settlement.”

Danforth said that issues discussed in the U.S.-Japan Structural Impediments Initiative talks, such as reform of Japanese distribution systems and business practices, “are not going to go away.” Congress, he said, “is going to keep attention focused on these problems and is going to insist on real action.”