Clinton Presses Japan for Trade ‘Rebalancing’ : Diplomacy: But Prime Minister Miyazawa rejects call to meet targets for increased purchases of U.S. exports.

President Clinton on Friday demanded a major “rebalancing” of the longstanding economic relationship between the United States and Japan, insisting that Tokyo must accept substantially more American exports.

In his first face-to-face encounter with Japanese Prime Minister Kiichi Miyazawa, Clinton insisted that the two countries launch high-level talks about ways to reduce their mushrooming trade imbalance, for the first time setting specific targets for U.S. exports in key areas.

He also hinted strongly that he wants Tokyo to spur the Japanese economy even more than the $115-billion stimulus package that Miyazawa announced earlier this week. U.S. officials contend that faster economic growth would prompt Japanese to buy more imports from America.

But in a clear disappointment for the Administration, the President got only part of what he wanted. While agreeing to launch new talks, Miyazawa flatly rejected a White House proposal that Japan meet specific minimum targets for taking in more U.S. exports.

And the prime minister conspicuously did not mention any plans to enlarge the economic stimulus plan he had outlined, leaving Clinton to describe the agreement as “a good first step” but to add that it “must be part of a continued and sustained effort.”

The developments came as the Commerce Department reported that the United States’ foreign trade deficit widened again in February, with the gap between the United States and Japan increasing sharply.

For all of last year, the United States had a $49-billion imbalance with Japan, 59% of its total trade deficit.

Although the White House hailed Friday’s meeting as a breakthrough, U.S. officials conceded later that the Japanese prime minister’s positions suggested that the Administration is likely to face an uphill battle once the talks get under way.

In an unusually blunt response for a Japanese leader, Miyazawa warned at a joint press conference after the talks that the quest for freer trade “cannot be realized with managed trade”--economic jargon for setting targets--”nor under the threat of unilateralism,” that is, U.S. threats.

He also turned the tables on Clinton by expressing “serious concern” about “some trends in the United States,” suggesting that the Administration do more to damp protectionist sentiment here at home and to increase American competitiveness.

The agreement reached by the two leaders Friday covered only the procedure for launching the new talks. The two pledged to come up with a framework and agenda for the negotiations by July 7, the date of the annual economic summit of the world’s seven leading industrial powers.

Item-by-item discussions then would be expected to last nearly a year.

Although the Administration gave no details, officials said that Washington will press for the talks to encompass broad macroeconomic issues as well as ways to spur exports of specific U.S. industries, from computers and auto parts to insurance and financial services.

The two leaders also agreed to meet twice a year, partly to discuss economic issues.

Top Administration officials insisted publicly that the initiative was a bold one. “The U.S. is finally putting the economic issue first,” Mickey Kantor, the U.S. trade representative, told an interviewer on Cable News Network.

They also contended that the new round of talks will succeed because the Administration plans to insist on “measurable results”--meaning that they will pressure Japan to meet specific performance requirements for allowing U.S. exporters a larger share of the Japanese market.

But critics noted that the two previous administrations launched similar negotiations and in both cases ended up with Japan making only incremental changes in its economic and trade policies, despite heated American rhetoric at the start.

And officials on both sides agreed that the two governments are deeply divided over whether Japan should agree to meet performance targets for each category of U.S. exports. “How one measures success will be an issue,” a White House official said.

As a result, most analysts expect that Japan will resist even more strongly than usual any American demands that it increase its purchases of overseas goods--possibly leading to greater strains between the two nations later this year or early in 1994.

Indications Friday were that the White House initiative apparently was a last-minute effort, hastily put together late Thursday afternoon in an effort to enable Clinton to “talk tough” when Miyazawa arrived for their meeting here.

Officials said that the idea for setting specific targets for Japan to meet was the brainchild of Laura D’Andrea Tyson, chairman of the White House Council of Economic Advisers, who has long favored a more aggressive trade policy for the United States.

The formula was modeled on an agreement on trade in semiconductors that the United States and Japan negotiated in 1986. Although the pact was criticized during its first few years, it eventually resulted in U.S. firms’ boosting their share of the Japanese market to 20%.

The Japanese have said that they regret signing the accord.

Japanese officials also sought to put a positive spin on the summit meeting, telling Japan-based reporters in a briefing that Miyazawa achieved his objectives merely by developing rapport with the new President.

“We feel a complete relationship of trust developed based on the atmosphere during lunch,” one official said.

Even so, the Japanese made it clear that Tokyo will resist Clinton’s demands for setting specific performance targets for any new policy changes that are negotiated. A Foreign Ministry official summarily dismissed them Friday as “probably for domestic consumption.”

They also reiterated that Japan will make its own demands of the United States during the coming talks.

“It’s still a new government, so their policies haven’t firmed yet,” one official said. “We will think about what aspects . . . we would like to talk about.”

Clinton and Miyazawa met for about 3 1/2 hours Friday--35 minutes by themselves and the rest of the time with their top economic and trade advisers.