Bush Won’t Cite Japan for Unfair Trade : Commerce: The U.S. notes economic concessions made by Tokyo. The congressional backlash appears to be less than expected.

President Bush announced Friday that he will not brand Japan as an unfair trading partner this year, and indicated that he will concentrate on a broader goal--negotiating a global trade accord that opens new markets worldwide to U.S. goods and services.

As expected, Bush approved a recommendation by his Cabinet-level Economic Policy Council that he not launch formal new trade complaints against any country, despite widespread demands in Congress that he do so. Last year, he cited Japan, Brazil and India as violators.

Instead, the President declared that from now on, the “highest priority” for U.S. trade policy would be “a timely and successful conclusion” to global trade talks, which are aimed at relaxing restrictions on trade in agriculture, services and intellectual property.

The negotiations, known more formally as the Uruguay Round, because they were launched in Punta del Este, Uruguay, in 1986, are scheduled to end in December. Bush said the talks, being held in Geneva, are “the most promising route” for opening new trade opportunities.

U.S. officials said Friday’s decision reflects the President’s belief that Japan has made enough concessions in recent trade talks with the United States that it deserves a break. They feared that targeting other countries now would jeopardize support for the Uruguay Round.

Partly to avoid seeming to flout the 1988 Trade Act, which requires the White House to list its formal trade-negotiating priorities each spring, Bush continued the trade complaint that the Administration filed last year against India, to which New Delhi has yet to respond.

The token inclusion of India, and personal appeals to key lawmakers by U.S. Trade Representative Carla A. Hills, muted the backlash that had been expected to emerge from Congress when the President’s announcement was made.

While not exactly praising Bush’s decision, Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, conspicuously avoided the harsh criticism that he had issued earlier this week, instead congratulating Hills for not “abandoning” the Trade Act’s requirements.

House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) also was more circumspect than had been expected. “I might have decided this one differently but hope that the Administration’s decision has proven to be the right one,” he said.

White House strategists are betting that the congressional outcry--which they still expect to be strong, particularly in the wake of Bush’s decision not to target Japan--nevertheless will die down as the lawmakers’ attention is diverted to other issues.

Hills told a news conference Friday that “Japan has moved further this year than any other of our trading partners” to meet U.S. demands to open markets. She asserted that any move to single Tokyo out at this point would be “counterproductive.”

Reaction from Tokyo was restrained. Japanese Foreign Minister Taro Nakayama issued a statement welcoming Bush’s decision and pledging to “continue to make every effort” to promote good economic relations with Washington.

But he also reiterated that Japan, like many other countries, regarded the so-called Super 301 provision of the 1988 Trade Act--which effectively threatens targeted countries with U.S. retaliation--as itself a violation of international trade rules.

It was such adverse reaction to the 1988 law around the globe that helped persuade Bush to avoid citing any specific countries this time around. Even Japan had technically refused to negotiate “under the gun.” Talks with Tokyo were recast under a broader framework.

Administration officials took pains Friday to assure lawmakers that they had not given up maintaining pressure on Japan to open its markets.

Hills reminded a press conference that a final report on the yearlong Structural Impediments Initiative, a series of broad-scale economic talks that the two countries have been holding for almost a year, is due in July.

“Japan is on notice,” she said. “We expect maximum efforts to yield maximum results.”

She also reiterated that even though the Administration is eschewing the use of formal trade proceedings now, it will not hesitate to file new trade complaints if Japan reneges on its promises or if the Uruguay Round negotiations do not produce the desired results.

“I do not need Super 301 now to address our priorities,” she said. But she warned that the Administration will reconsider if current negotiations do not bear fruit.

In line with the 1988 Trade Act, the Administration also published a “watch-list” citing 23 countries that it believes are not adequately protecting intellectual property, such as patents and trademarks.

Among those on the list are Argentina, Canada, Chile, Colombia, Egypt, Greece, Indonesia, Italy, Japan, Malaysia, Pakistan, the Philippines, Saudi Arabia, South Korea, Spain, Taiwan, Turkey, Venezuela and Yugoslavia.

But the citations do not carry any threat of retaliation.

At the same time, Hills disclosed that she has decided not to take further action to enforce a 1986 accord with Japan involving trade in semiconductors, despite demands by some U.S. microchip makers that she reimpose punitive tariffs on Tokyo for violating the pact.

Hills said that although Japanese companies had not bought as many U.S.-made microchips as hoped, foreign penetration of the Japanese chip market has risen dramatically over the past year and a half and is increasing markedly.

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

In the SII negotiations, Japan pledged to make sweeping reforms on a spate of major issues, from overhauling the country’s archaic product distribution system and cracking down on monopoly practices by Japanese business to increasing public spending for infrastructure.

Tokyo also moved to settle U.S. complaints involving satellites, super-computers and forest products. It eliminated roadblocks to protecting sound recordings. And it agreed to fast-track negotiations on telecommunications equipment.

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