NEWS ANALYSIS : U.S.-Japan Talks End, but Barriers Remain : Trade: American officials claim progress was made. But recent statistics give no cause for optimism.

After two days of talks, American negotiators pronounced Thursday they were making “good progress” towards removing the root causes of the United States’ $43-billion trade deficit with Japan.

Longtime trade observers, including American business executives in Japan, however, said the the 1990 agreement to tackle the underlying causes of the bilateral trade imbalance, known as the Structural Impediments Initiative (SII), has done little to help them sell products in Japan.

“It is questionable whether Japan will make the changes America is demanding,” said one senior executive based in Tokyo. “And even if the changes are made, it is doubtful they will help American business sell in Japan,” he said, requesting anonymity.

In their annual progress report, the American negotiating team commended Japan for strengthening its antitrust efforts, boosting government spending in public works, speeding up reviews of patent applications and implementing land reform to cut housing prices.

“The U.S. welcomes with particular satisfaction the new commitments by the Japanese government . . . which deal with the areas of distribution and exclusionary practices,” said Deputy U.S. Trade Representative Michael H. Moskow.

Recent trade statistics, however, show no basis for optimism. Japan’s imports are shrinking and its trade surplus is rocketing. Earlier this month, Japan announced a record $49-billion global trade surplus in the first six months of 1992, up 52.4% from the first half of 1991.

While the United State’s trade deficit with the world has steadily shrunk, its deficit with Japan has grown.

When this trade agreement was signed in 1990 it was heralded as a bold, new approach to trade and the centerpiece of the Bush Administration’s efforts to open Japan up to American products.

For decades, American negotiators had made annual journeys to Japan to peel back layers of protectionist barriers only to discover that, like an onion, new layers remained.

Under the new, awkwardly named initiative, the two sides would spend less time chasing after details and instead target such core problems as Japan’s keiretsu system of cross shareholdings and its inefficient distribution system.

The U.S. claims one early success. Changes in Japan’s large retail store law, which had previously made it virtually impossible to get approval to build large discount stores, helped U.S.-based Toys R Us begin operations in Japan last year.

Critics, however, point out that the effort to change Japan’s big store law was actually begun in the early 1970s. And Japan has made progress only in implementing measures it has wanted to undertake anyway, such as boosting its public works spending. But the original goal of the talks was to open Japan’s markets, and here U.S. negotiators appear to be back to the old game of peeling layer after layer of problems.

Although America succeeded in getting Japan to strengthen its antitrust laws, this week it had to negotiate a new commitment from Japan to better enforce the new laws.

Next year, a new batch of U.S. trade negotiators are likely to discover that Japan’s Fair Trade Commission doesn’t have the power, will or resources to crack cartels and price-fixing arrangements.

Trade Talks

Although U.S. negotiators have given an upbeat assessment of the Structural Impediments Initiative talks with Japan, which are aimed at removing barriers to trade and investment, disagreements remain on key issues:

* Lifting Japanese restrictions on land-use.

* Easing barriers caused by Japanese keiretsu, corporate groupings whose cooperative activities allegedly work against imports.

* Whether Washington has met its commitments to improve U.S. competitiveness, boost exports and reduce the budget deficit.

* Specific measures for Japan to achieve the 3.5% economic growth it has forecast for the fiscal year ending next March.

* What Japan will do to meet its goal of reducing the high cost of home ownership, an achievement the United States believes would help American imports.