Japan Snubs U.S. Demands on Public Works Spending

Prime Minister Toshiki Kaifu said Friday that he would not give in to a key U.S. trade demand that Japan specify targets for boosting its public works spending, a hoped-for wedge in opening the market here to more foreign business.

Kaifu’s tough stand, coming a day after a stunning trade breakthrough in which Japan accepted U.S. technology as a cellular-phone standard, suggests that the government intends to assert itself despite heavy pressure for economic reform.

Japan agreed in April to increase public spending as part of an unprecedented pact to reduce its $49-billion trade surplus with the United States by attacking trade barriers. But the prime minister has come under harsh criticism in Parliament for bowing to U.S. demands.

Kaifu said Friday that Japan would refuse to specify the ratio of public works spending to its gross national product in a final report on the April agreement, called the Structural Impediments Initiative.

“It was settled in the interim report (in April),” Kaifu told reporters. “I don’t quite understand why they are raising the issue again.”

Japan did agree then to boost public spending, which would expand the number of projects that U.S. firms could bid on.

But the United States had sought a definite annual spending target. Japan, rejecting what it called interference in internal affairs, said it would specify a total figure for the next 10 years and decide yearly spending flexibly to avoid overheating the economy.

Kaifu’s firm stand was a striking contrast to Thursday’s announcement.

The government, in what may be the most potent symbol of Japan’s recent willingness to open its markets, said it was adopting digital cellular-phone technology made by Motorola, Inc., as a national standard.