EC, Japan Meet to Discuss Trade Deficit

The European Community and Japan met today at a high level for the first time in 3 1/2 years to try to clear the air between the two trading giants, EC officials and diplomats said.

The community is running a huge and persistent trade deficit with Japan, its second-biggest supplier after the United States.

“The deficit of the community can only be reduced significantly if EC exports to Japan grow 2 1/2 times as fast as Japanese exports to the EC,” an EC official said.

In the first nine months of 1989, EC exports to Japan amounted to just 44.9% of its imports--still worse than the whole of 1979, when the ratio stood at 45.5%.

The community is also concerned about the quality and quantity of Japan’s investment in its 12 nations.

The Japanese have been investing heavily in both manufacturing capacity and financial services in the community to guarantee themselves a springboard for reaching 320 million consumers in the post-1992 EC single market.

Figures from Japan’s Ministry of International Trade and Industry put Japan’s investment in the EC at the end of March last year at $30.164 billion, against only $3.013 billion for the community in Japan.

The world’s three mighty trading powers have recently been conferring in pairs to try to defuse trade tensions. The United States and the EC recently set up formal structures to guarantee a closer working relationship, with twice-yearly meetings.

The U.S.-EC alliance was actually behind what Japan and the EC had set up on similar lines long ago. But Japan has been unable to keep its dates with the community since 1986 because of internal political wrangling.

Today’s meeting, bringing together Japanese International Trade and Industry Minister Kabun Muto and Foreign Minister Taro Nakayama with the EC’s commissioner for trade, Frans Andriessen, is symbolically important, whatever it yields.

“It’s symbolic of a new, close relationship, though in technician’s terms, it won’t necessarily cut much ice,” one diplomat said.

The diplomats said the talks are likely to focus on the potential for changing the situation to the community’s advantage. But the most sensitive issue of all--terms for Japanese car imports after 1992--is unlikely to be explored in depth.