Cabinet Council Urges President Not to Cite Japan : Trade: To head off criticism in Congress, the panel also recommends taking action against India for alleged unfair practices.

President Bush’s Cabinet-level Economic Policy Council recommended Thursday that the Administration not cite Japan for alleged unfair trade practices this year, even though following the recommendation appears certain to spark a backlash in Congress.

The unanimous decision is to be announced formally today. Bush, who was not at the meeting, is expected to approve the Cabinet recommendation intact, key Administration officials said.

In an effort to head off possible criticism that he is flouting the 1988 Trade Act, the council also suggested that Bush re-target India for talks. The Administration launched trade proceedings against India--along with Japan and Brazil--a year ago. Tokyo and Brasilia eventually made concessions, but New Delhi refused to negotiate at all.

Under the 1988 law, the White House is required each spring to cite specific foreign trade practices that it wants to eliminate and then seek formal negotiations with the countries involved. The measure authorizes the President to impose sanctions if the talks fail.

The Cabinet council’s move, which marks a softening of the tougher stance on trade that the Administration took a year ago, reflects a belief by Bush and his top policy-makers that Japan has made enough major concessions in recent trade negotiations to deserve some reward.

Moreover, it was not clear Thursday whether Bush would agree to target even India when he makes his final decision today.

Some Bush strategists fear that if the White House were to cite New Delhi, the action could jeopardize support for the Uruguay Round, the global trade talks under way in Geneva. Several have urged a so-called zero-option approach of citing no countries this year.

The Cabinet council also urged the President to issue a warning that he would reconsider the Administration’s position if Japan does not follow through on the concessions it has promised, or if the broader trade talks in Geneva go sour later this year.

The move is a gamble. Many Bush strategists believe that with trade pressures easing, any grumbling from Congress is likely to be short-lived. Instead, they say the real backlash may come next year, when the Administration seeks approval of any new Uruguay Round accord.

Even so, it is clear that Congress--whose members already have begun criticizing Bush for refusing to use the unfair-trade-practices provision of the 1988 Omnibus Trade Act--will not let the Administration off lightly.

Anticipating the President’s decision, House Majority Leader Richard A. Gephardt (D-Mo.) joined 69 other House members in urging the Administration to cite Japan again this year.

The Administration “wants to give up” in the trade fight, Gephardt said at a news conference on the Capitol grounds, “but we say America can do better.” He warned that letting Tokyo off the hook so early would be “a serious mistake.”

Members of the Senate Finance Committee have warned that failure to use the 1988 law could spark a crisis between Congress and the Administration and might endanger congressional approval of any Uruguay Round accord or other trade legislation.

Nevertheless, Administration officials said Bush apparently was determined to avoid leveling any new charges--particularly against Japan, where Prime Minister Toshiki Kaifu has spent a lot of political capital pushing through trade concessions for Washington.

The list of trade concessions that Japan has made over the past several weeks is substantial.

In an interim report on yearlong economic talks known as the Structural Impediments Initiative, Japan pledged to make sweeping reforms on a number of major issues in an effort to open Japanese markets to more foreign goods and businesses.

The list includes first steps toward overhauling the country’s archaic product distribution system, cracking down on monopoly practices by Japanese business, increasing spending for public works and reforming the country’s outmoded pricing practices.

Meanwhile, after stalling for months, Tokyo moved to settle U.S. complaints involving communications satellites, super-computers and forest products. It eliminated roadblocks to protecting sound recordings. And it agreed to put negotiations on telecommunications equipment on a fast track.

Japan also moved to settle a number of other U.S. complaints involving everything from legal services and food additives to steel and pharmaceuticals. It also agreed to help support the Treasury’s year-old Third World debt plan.

The series of concessions from Japan followed a meeting between Bush and Kaifu early in March in which the President warned that domestic pressures on the trade issue were intensifying and that the Administration may not be able to control them.

At the same time, domestic pressures in Japan have been changing, amid increasing popular support for overhauling Japan’s economy to allow more competition and imports of foreign products and businesses.