U.S. Threatens Tougher Effort to Open Up Japan : Trade: Treasury Secretary Bentsen sounds warning after talks fail. Tokyo’s bureaucracy called an obstacle.

Treasury Secretary Lloyd Bentsen threatened Sunday that the United States might take a more forceful approach to prying open Japanese markets after top U.S. and Japanese officials failed in an attempt to break a deadlock in trade talks.

“Japan is out of step,” Bentsen said after a hastily scheduled 35-minute meeting with Prime Minister Morihiro Hosokawa in Tokyo and before heading back to Washington at the end of a 12-day trip to Russia and Asia.

But the stern public report delivered in Tokyo was tempered by private assessments offered later by U.S. officials, who portrayed the Japanese leaders as anxious to reach an agreement if they can overcome opposition within the government’s powerful bureaucracy.

And Bentsen, speaking with reporters as he flew here from Tokyo, said, “I’ve heard more positive things than I’ve heard before.”

A Japanese official said Hosokawa told Bentsen that he is prepared to become personally involved in the trade negotiations, which are designed to erect a general framework for opening Japan’s lucrative market to American companies.

But despite some progress elsewhere in the economic relationship--demonstrated last week by an agreement to open Japan’s valuable government construction business to foreign companies--the parade to Tokyo of officials at the sub-Cabinet level has produced almost no progress in the framework meetings.

Bentsen was the first Clinton Administration official of his rank to join the fray in Tokyo, turning up the pressure on the Japanese government in an effort to find some common ground before Hosokawa meets with President Clinton in Washington on Feb. 11.

“No one should doubt the United States’ determination to see an open Japanese market,” the secretary said.

Asked whether the two countries would paper over their differences if the summit arrives without a compromise, he replied bluntly: “Don’t you believe it. We will not settle for any cosmetic agreement.”

U.S. officials did not elaborate on what Washington would do if the framework talks fail. But possible courses include the imposition of trade sanctions or taking steps to strengthen the yen, which would make Japanese goods more expensive in the United States and U.S. goods cheaper in Japan.

Bentsen conferred with Finance Minister Hirohisa Fujii before he met with the prime minister.

The sessions were not portrayed as negotiations. Rather, they were scheduled at Clinton’s request so the two Japanese officials could hear, from a senior U.S. government official, the extent of concern within the Administration over the lack of progress.

Fujii promised Bentsen that the Hosokawa administration will make “serious and vigorous efforts” to launch “a new economic stimulus package, including tax cuts,” according to Takatoshi Kato, the Finance Ministry official who briefed reporters.

In last summer’s initial agreement setting up the trade talks, Japan pledged to take measures to invigorate its stagnant economy, which both sides believe would help reduce the trade imbalance.

Fujii told reporters that he asked Bentsen to “please trust us” to try to implement effective policies to boost growth.

As much as they try to display a public face of understanding for Hosokawa’s political woes after he lost a key parliamentary vote on Friday, Administration officials have grown exceedingly frustrated with the lack of demonstrable progress.

In private before the meetings Sunday, they questioned whether Tokyo has any intention of yielding.

“This is a very closed economy. If they can sustain the status quo, they keep what they want, which is an open American market and a closed Japanese market,” a clearly frustrated senior U.S. official said Sunday. “We go through these ritual debates, in which they talk about everything, but we don’t hear any discussion about how they will undertake what they committed to do, which is open their markets.”

At the heart of the problem, in the view of U.S. officials, are Japanese government bureaucrats, who remain in senior positions of authority despite changes in the political leadership of their ministries.

In U.S. Cabinet departments, policy-making positions turn over with changes in administrations.

With this fact of Japanese political life in mind, Bentsen said: “I was really talking as much to the bureaucrats as I was to the finance minister.”

And Hosokawa, acknowledging the role of the permanent government aides, promised: “I’m telling my people that we want to bring this to a successful conclusion.”

Such a pledge to press the bureaucracy is important, a senior U.S. official said, but he expressed uncertainty as to whether the prime minister would actually make good on it.

Hosokawa also told Bentsen that he plans to keep his commitment to meet with Clinton in Washington next month.

Clinton and Hosokawa’s predecessor, Kiichi Miyazawa, agreed on the framework talks last July to set overall goals that would provide greater opportunities for U.S. companies to increase their sales and operations in Japan.

Manufacturers, auto makers, contractors, medical technology firms, telecommunications companies and providers of financial services, such as banks and insurance companies, have long complained that government regulations and the closed nature of Japanese society have blocked their sales efforts.

In the agreement, Tokyo promised to boost domestic economic demand--to bring about purchases of more foreign-made goods--and achieve “a highly significant decrease” in its trade surplus. The imbalance with the United States was $50 billion to $60 billion in 1993, a figure a senior U.S. official said was “nothing short of horrendous.”

Japan also promised to redraw the rules for government buying, to increase its purchases of foreign computers, supercomputers, satellites, medical technology and telecommunications equipment. Additionally, it promised to remove some barriers to its market and encourage the import of foreign automobiles and auto parts.

For its part, the United States agreed to bring down its federal budget deficit and improve production, providing the engine for world economic growth.

The Japanese political upheaval rumbling along since last summer has complicated the overall effort to improve trade relations, even as it brought Hosokawa to power with a promise of political reform and a more open attitude toward the United States than some predecessors had displayed.

With the vote against his political reform plan in the upper house of the Japanese Parliament on Friday, Hosokawa “has taken a heavy body blow,” a senior U.S. official said.

The upshot is that he is in even less of a position to be seen as yielding to pressure from the United States.

Gerstenzang reported from Tokyo and Alaska. Holley reported from Tokyo.

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