U.S. Cites Trade ‘Backsliding,’ Will Press Japan on Its Promises : Pacific Rim: Washington says Tokyo hasn’t lived up to its April vows. President Bush may take the issue up with Prime Minister Kaifu.

The Bush Administration moved Wednesday to step up pressure on Japan to end what it considers backsliding on key promises that Japan made last April in a high-level accord designed to ease trade tensions between the two countries.

U.S. officials said Secretary of State James A. Baker III plans to warn Japan of the growing U.S. frustration--and to demand prompt action by the Tokyo government--during a meeting Friday with Japanese Foreign Minister Taro Nakayama in San Francisco.

If that does not produce results--and if a June 25-26 meeting between lower-level U.S. and Japanese negotiators ends in an impasse--President Bush may take the issue directly to Japanese Prime Minister Toshiki Kaifu before the seven-nation economic summit in Houston in July.

Failure to break the latest stalemate could prove crucial, possibly returning U.S.-Japanese relations to the tension-filled stage of last spring--and reviving anti-Japanese sentiment in Congress.

Japanese diplomats indicated this week that Nakayama is unlikely to offer any concessions during his meeting with Baker. They insisted that the trade talks are “going just fine” and that Japan “is faithfully carrying out” the promises it made in April.

The April accord--containing the most sweeping pledges for economic restructuring negotiated by any two trading partners--involved a number of Japanese pledges, from significant deregulation of Tokyo’s goods-distribution system to a crackdown on bid-rigging by Japanese companies.

But the report was intended only as an interim step that would form the basis of a final report that the two sides would hammer out early in July, just before the Houston economic summit. Bush and Kaifu are already scheduled to meet privately before the summit begins.

The Administration has become increasingly angered by Tokyo’s refusal to flesh out broad commitments signed April 5 in an agreement that was part of a process known formally as the Structural Impediments Initiative.

On Wednesday, U.S. Trade Representative Carla Anderson Hills hinted that Washington may consider retaliating in some way if Tokyo continues to balk--including abandoning Bush’s offer during a meeting with Kaifu in Palm Springs in March to make Japan a major player on the global diplomatic scene if it moved on trade issues.

Hills told reporters at a breakfast meeting that if Tokyo does not end its stalemate, the United States may consider dropping Bush’s Palm Springs offer and may well invoke trade sanctions on a few outstanding disputes--something both sides had sought to avoid.

“We have the various pressures that just exist in geopolitics,” Hills said. “They (the Japanese) would not be wise to think that . . . good relations would be maintained” if the impasse continues.

The possibility that Bush may have to become involved personally is important, because the President staked his personal prestige on the talks--and especially on Kaifu’s word at the meeting between the two men in March.

Bush told Kaifu then that reducing U.S.-Japanese trade frictions would enable the two countries to move toward a new “global partnership” in which Japan would get the wider say that it has been seeking on East-West relations and other broader issues.

On the strength of April’s interim report, Bush announced that he had decided not to brand Japan as an unfair trading partner again this year, despite demands by Congress that he “act tough.” The hope is that Japan will be even more forthcoming in the final accord.

High on the list of U.S. concerns is Japan’s refusal to set a specific numerical target in connection with a promise it made in April to boost government spending on public works projects in Japan.

Tokyo has already pledged to increase its public works outlays--both to spur domestic demand for more imports and to help finance more facilities in Japan to handle the distribution of foreign-made goods.

But Washington also wants Japan to set a specific goal of boosting public works outlays to 9% of national output in each of the next 10 years, from 6.3% now. Kaifu has refused, arguing that the issue was already settled in the interim report.

Officials say Tokyo may announce a minimum spending level but will not commit itself to any percentage.

Nakayama is also expected to tell Baker on Friday that Japanese policy-makers still have not reached a consensus on another U.S. demand--that they spell out precisely how much Japan will boost penalties for violations of its anti-monopoly law.

Japan had promised in the April draft to increase its penalties for such infractions but did not specify how much they would rise. U.S. officials argue that the promise is virtually meaningless unless Japan spells out precisely how much the penalties will go up.

Art Pine reported from Washington and Sam Jameson from Tokyo.