Japan Fears It Will Be Next Trade Target : Commerce: With peace between America and Europe, Tokyo worries that international attention may turn to its ban on rice imports.

Now that America and Europe have averted a trade war over oilseeds, the trade guns will be turned on Japan.

That is what Japan fears as long-stalled talks on the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) restart this week in Geneva.

A key stumbling block in the talks, now in their sixth year, has been Japan’s ban on rice imports. Transatlantic friction, however, has enabled Japan to avoid the thorny problem.

Now that America and Europe have made their peace, said articles splashed across the front pages of Japan’s major newspapers, the pressure will be on Japan to open up. Japan fears that failure to accept some form of rice imports will lead to its isolation in the international community. Prime Minister Kiichi Miyazawa’s handling of the rice issue will be a major test for him.

So far he is moving cautiously. He vowed at an impromptu press conference in front of his house over the weekend that Japan will not end its rice import ban. His agricultural minister, Masami Tanabu, promised that Japan would stand by its rice farmers. Although farmers are a tiny proportion of Japan’s voters, they have disproportionate power under the nation’s lopsided electoral system.

Behind closed doors, however, government officials are busily seeking the ingredients of a compromise that could avert a showdown in Geneva.

With Japan’s trade surpluses reaching record highs, however, there will be little sympathy for Japan’s position. Although many analysts argue that Thailand and Vietnam, not America, would be the main beneficiary of an open Japanese rice market, the United States has long placed a high priority on cracking the Japanese rice market. The U.S. Rice Millers Assn. said Friday that it would ask Washington to take retaliatory steps if Japan does not open its rice market.

The future ability of California rice farmers in the Sacramento Valley to export to Japan may be dependent on state water-distribution policies. California rice farmers have been under pressure from state bureaucracy and urban interests to cut back cultivation because rice-growing appears to consume large quantities of water during the state’s ongoing drought.

The Sacramento Valley has been the only U.S. rice-growing area that has been able to grow a quality strain of medium-grain japonica rice, the sticky variety most favored by the Japanese.

Even if there is a compromise, Miyazawa could have trouble getting the package passed in Parliament. The ruling Liberal Democratic Party is currently in turmoil as a result of a scandal involving illegal political contributions by many of its leaders. Shin Kanemaru, the power broker responsible for pushing many of Miyazawa’s more controversial bills through Parliament, has resigned as a result of the scandal.

Opposition parties are likely to exploit the rice issue to court the farmers’ vote.

Japan’s powerful rice lobby, the Central Union of Agricultural Cooperatives (CENCHU), has vowed to fight rice opening “to the end.”

Not allowing bans on agricultural imports would “inflict irrevocable damage on the world’s food importing countries,” said the group’s head, Mitsugu Horiuchi.

In Miyazawa’s favor is growing public opinion in favor of rice liberalization. Japan’s business community has also come out in favor of rice imports.

Japanese negotiators are expected to make some or all of the following proposals:

* Demand that Japan be allowed to place a 900% tariff on imported rice. That would make imported rice slightly more expensive than rice grown in Japan.

* Include safeguards that allow maximum limits on imports.

* Cut tariffs by 10% over 10 years instead of 15% over six years as proposed in the latest draft of the GATT agreement.

Times staff writer David Olmos contributed to this story.