Tokyo Trade Talks Report Little Progress : Relations: The U.S. side says it could commit to a 50% deficit cut. No date has been set for another round of negotiations.

After concluding two days of intense discussions, weary Japanese and American negotiators late Monday night said they had made little progress toward constructing a new framework for talks to reverse deteriorating trade relations.

American negotiators conceded they are unlikely to reach an agreement before world leaders gather here for the July 7 Group of Seven summit. Prime Minister Kiichi Miyazawa and President Clinton set that deadline for themselves during their April meeting in Washington.

“The President said he wanted a good agreement, not a quick agreement,” said a senior Administration official. He said no date has been set for the next round of talks.

Miyazawa’s lame-duck status, following a recent no-confidence vote, is widely regarded as an obstacle to progress in the trade talks.

But the sides also appear particularly divided on U.S. demands for numerical benchmarks in future agreements to measure progress toward meeting goals for access to Japanese markets.

American negotiators also warned that the absence of an agreement to cut Japan’s trade surplus could damage a relationship that both sides agree is critical to world prosperity.

“The relationship as it stands now is badly corroded,” said a senior U.S. official. “Lack of access and the large current account surplus will exacerbate an already difficult economic relationship.”

The official said a weak economic relationship could weaken two other pillars of U.S.-Japan ties: security and global cooperation. The U.S. official said a new framework for talks is necessary “as a means of arresting the downward spiral” in relations.

In a new twist, American negotiators said they would be willing to commit the United States to a 50% cut in its budget deficit in the next three to four years through a combination of budget cuts and tax increases. “We are willing to commit ourselves to the whole world” on this, said a senior official. “That is part of the bargain.”

Officials said they are asking Japan to make a similar commitment to reduce a trade surplus that reached $132 billion last year. “We have policies in place that would reasonably be expected to lead to our goal; that is all we are asking of Japan,” the U.S. official said. He was referring to an American request that Japan slash its surplus as a percent of gross domestic product, from 3.2% last year to between 1% and 2% in the next three to four years.

American officials appeared to be responding to taunts from Japanese officials who have wryly suggested that the Americans apply to their own deficit problem the same kind of numerical targets they are demanding from Japan on its trade surplus.

Japan, nevertheless, continued to oppose the use of any numerical targets, arguing it has no control over numbers such as its trade surplus. A report released Monday by Japan’s Fair Trade Commission, a weak enforcer for the nation’s anti-monopoly laws, concluded that “our country should not set any numerical targets to promote imports,” because such policies would “distort competition in the market.”

Japanese officials fear that if they bend to American demands and agree to reach specific targets, as they did with the current semiconductor agreement, failure to reach the targets might subject them to retaliation.

Japanese politicians have also discovered that standing up to America can be good politics. That is particularly important now as Japan heads for parliamentary elections, which could determine the survival of the ruling party.

The Japanese have been dismissing most core American proposals for resolving trade problems and countered with more general plans that exclude such issues as autos and auto parts, which make up the bulk of the Japanese surplus.

“If Japan was a closed market, it would be easier” to take measures, said Noboru Hatakeyama, until recently the vice minister for International Trade and Industry. “But since our door is completely open, we can’t open it any more.”

America’s most persuasive argument may be that its proposals for opening the Japanese market will benefit Japan. “What we are proposing would yield results not only to Japan’s trading partners but also the Japanese economy and the Japanese consumer,” said W. Bowman Cutter, assistant to the President for economic policy and chairman of the negotiating team.