Trade Flap Casts Shadow Over Hosokawa’s U.S. Visit : Commerce: Japanese and American officials both resist compromise. Prime minister is due in Washington on Friday.

American and Japanese officials engaged in diplomatic brinkmanship Wednesday on the eve of Prime Minister Morihiro Hosokawa’s visit here, with both sides refusing to compromise in an increasingly bitter trade dispute.

Japanese Ambassador Takakazu Kuriyama said his nation will not yield to an American demand that the two countries determine a specific method to measure increases in Japan’s purchases of U.S. goods and services and firmly reminded the Clinton Administration that “any negotiation requires compromise on both sides.”

The U.S. response was blunt. “What we will wait for until hell freezes over is an agreement that there will be measurements,” Deputy Treasury Secretary Roger Altman said.

The argument between the two countries stems from an agreement reached by President Clinton and Hosokawa’s predecessor, Kiichi Miyazawa, just hours before Clinton left Tokyo last July.

That agreement, couched in vague language that has come back to haunt officials in Washington and Tokyo, committed the two nations to devising a framework that would lead to a reduction in Japan’s towering trade surplus.

The United States has since insisted that unbendable measurements must be developed to determine whether that goal is being met in four areas--sales to Japan of telecommunications equipment, medical equipment, insurance and autos and auto parts.

American officials have insisted that they will not accept an agreement that papers over their differences with Japan, raising the possibility that the angry trade relationship will finally rupture.

But much of the heated rhetoric is common in such negotiations, and U.S. officials have privately sent signals suggesting that neither side wants the situation to deteriorate into a trade war.

Negotiations have taken place in Washington and Tokyo, with the aim of reaching an agreement before Hosokawa’s visit Friday.

But U.S. Trade Representative Mickey Kantor said that, as of today, the two nations “are stuck on dead center. We are looking for tangible progress.”

American officials temporarily broke off talks Tuesday night, and the two sides did not meet Wednesday, in anticipation of the negotiations resuming at a higher level today when Japanese Foreign Minister Tsutomu Hata joins the discussions.

Clinton has come under increasing pressure in Congress to impose trade sanctions if the talks do not move the two countries closer to more open trade relations and a reduction in Japan’s $132-billion trade surplus, nearly half of which is with the United States.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee’s subcommittee on trade, said that without demonstrable progress, there will be strong support for imposition of economic sanctions intended to force Japan to open its markets to more American products.

His counterpart in the House, Rep. Sam Gibbons (D-Fla.), said any agreements reached by Clinton and Hosokawa “must provide for tangible and measurable results. If they do not, the United States should reject them and pursue an alternative course of action that will truly restore some semblance of balance and equity to our bilateral trade relationship.”

Kuriyama, the Japanese ambassador, said Hata’s presence at the negotiating table today will reflect Japan’s readiness to make “every effort possible to reach agreement by Friday.”

He said Japan does not oppose “objective criteria” or “numerical criteria” that would be used to guide the U.S.-Japanese trade relationship.

But, he said, “What we are opposed to is to set up some sort of numerical or quantitative targets or goals to which Japan should commit itself.”