Bureaucrats Stall Japanese Trade Reform, U.S. Says : Commerce: Civil servants are resisting deregulation and liberalization in fear of losing power, writes U.S. trade official.

U.S. Trade Representative Mickey Kantor on Monday attacked Japanese bureaucrats, accusing them of blocking trade reforms in order to hold on to power.

Kantor’s blunt statements, published in a letter to a leading business newspaper here, signaled that the United States is shifting its trade focus to Japan now that it has the successful conclusion of global trade talks and approval of the North American Free Trade Agreement on its score card.

The United States is also paying more attention to China, another country with which it is having increasingly contentious trade relations, Kantor said during a press conference in Washington.

China may face a reduction in its textile and apparel exports to the United States if it does not take stronger action against illegal shipments of those products into this country, Kantor said.

The letter on Japan, in addition to a statement from another key U.S. official that the U.S.-Japan bilateral “trade framework” talks launched this summer have not been going well, also suggested that U.S. officials may be trying to push top political leaders to pressure civil servants handling the early stages of the framework talks to be more receptive to U.S. demands.

The bureaucracy, Kantor wrote, is resisting attempts by Prime Minister Morihiro Hosokawa’s 4-month-old administration to cut regulations and unwritten directives that hurt sales of American products.

Japan’s bureaucrats “continue to resist deregulation and liberalization measures because they fear a loss of power,” he said in the letter published in the Nihon Keizai Shimbun.

In focusing on the bureaucracy, Kantor singled out a group which plays a prominent role in setting policy, far more so than their U.S. counterparts. Officials, including the staff of the Ministry of International Trade and Industry, write laws, set policy and even draft speeches by Cabinet members. Few bureaucrats are picked by incoming administrations, and politicians are often afraid to challenge their seniority and familiarity with policy.

In briefing reporters on the framework talks, Jeffrey E. Garten, U.S. undersecretary of commerce for international trade, said Washington is now ready to focus more acutely on the talks with Japan.

“It’s only really, I think, in the last few days that the compass is turning to Japan, and I think it’s going to be a very intense focus from the Washington side,” Garten said.

Japanese preoccupation with domestic political crises, especially a drive by Hosokawa to enact political reforms, may lead to failure in the ongoing bilateral trade talks, Garten warned. That, in turn, could poison the atmosphere for a Clinton-Hosokawa summit set for Feb. 11 in Washington, he said.

“The stakes are extremely high,” Garten said. “This summit is going to set the tone for U.S.-Japan relations for possibly the entire Clinton Administration. The biggest danger on the horizon is that there is a disparity in focus and a disparity in priority. And that’s always a very dangerous thing in bilateral relations.”

The reformist seven-party coalition that Hosokawa heads is generally viewed as more open to Washington’s goals--especially in terms of market-opening and deregulation of Japan’s economy--than is the powerful government bureaucracy in Tokyo.

Garten noted that the U.S. Congress and American industry have built up high expectations that the framework talks lead to significant market openings in Japan. But the talks so far have seen “very little progress,” he said.

“There are still arguments over definitions, arguments over just the basic approach as to what we’re trying to do,” Garten said.

In launching the talks, the two sides agreed to establish “objective criteria” to “assess” the implementation of market-opening policies in Japan. But ever since, Japan has charged that the United States is trying to set “targets” for foreign imports in different market sectors, with the implicit threat that sanctions may be imposed if these targets are not met.

Japan’s global trade surplus this year is projected to be $142.2 billion, up from $132.3 billion last year, Garten said. Its surplus with the United States, he said, will be about $56 billion this year, up from $49.6 billion last year.