U.S. Debates Firmer Stand on Japan Trade : Diplomacy: Officials divided on how much pressure to apply over growing imbalance as two leaders prepare to meet.

Several years ago, when Tsutomu Hata was the agriculture minister in the Japanese government run by the Liberal Democrats, he drew a firm line: Not a grain of foreign rice would be allowed into Japan.

Now, he is foreign minister in the governing coalition that overthrew the Liberal Democrats. And he is asking President Clinton to understand the political pressures his prime minister, Morihiro Hosokawa, is facing as the new government tries to redesign Japan’s economic and political systems. The two leaders will meet today.

The arguments made over the years by Hata, who met Thursday with senior Administration officials as they tried to head off a collision between their two governments, parallels the debate among the Japan experts in the United States.

They are thrashing out whether now is the time to finally draw a firm line of their own by insisting that Japan drop its decades-long defense against foreign access to its lucrative markets.

On one side are the “revisionists,” among them U.S. Trade Representative Mickey Kantor, Deputy Treasury Secretary Roger Altman, and Bowman Cutter, a senior White House economics adviser.

They are adamant: It is time to hold Hosokawa to a pledge made by his predecessor, the last of the Liberal Democrats’ prime ministers, who promised within six months to establish a framework of “quantitative indicators” for greater foreign access in four key trade groups.

On the other side are the “chrysanthemums”--a term taken from the seat of Japanese royalty, the Chrysanthemum throne.

They argue that the United States must recognize the efforts Hosokawa has already undertaken, as well as the difficulties he has encountered trying to stimulate the Japanese economy with tax cuts that are vehemently opposed by the powerful bureaucrats of the Japanese government.

“In a nutshell, I have a feeling the Clinton people have become like the proverbial mouse trapped in a corner by a cat,” said Ronald Aqua, vice president of the U.S.-Japan Foundation. “They don’t know which way to run.”

Within the State Department, said one Administration official, some are worried that the single-minded focus on economic issues and the unyielding stance dictated by the White House will weaken the other pillars of the U.S.-Japanese relationship. Those include a security partnership that has ebbed in importance with the end of the Cold War but continues to carry weight because of uncertainties over North Korea and the broader political relationship in which Japan is frequently a partner of the United States in such areas as combatting pollution and global population growth.

“There is concern that the other matters might fall by the wayside in the debate over economic issues,” the official said.

But with the exception of the few voices at the State Department, senior Administration officials say they are unanimous in their insistence that there will be no retreat to an agreement that papers over the differences. And, they say, there is little risk to the strength of the overall U.S.-Japanese relationship.

“I believe it is still a stable relationship, and I would not say it is permanently damaged in any sense,” Altman said. “But the economic imbalance has to be corrected and the relationship will not be able to remain as solid as it should, absent that.”

Throughout Thursday, groups of senior and mid-level U.S. officials met with their Japanese counterparts, probing for a willingness on the part of the visitors to agree to a measurable framework that would increase Japan’s imports in four economic sectors: autos and auto parts, telecommunications equipment, medical equipment and insurance.

For one reason or another, each sector has erected nearly insurmountable barriers to foreign firms. The four were agreed upon during Clinton’s Tokyo visit last July as the first targets in the attempt to bring down Japan’s trade surplus. That imbalance reached $132 billion last year, nearly half of it with the United States. By nightfall Thursday, there was no substantial progress to report, Altman said.

What had given U.S. officials hope was the centerpiece of Hosokawa’s campaign program: deregulation of the rigid Japanese economy.

“One of the arguments you hear is this (U.S.) approach is not necessary because they are deregulating and opening up. Up to this point, it’s all rhetoric and there is no deregulation,” said a senior Administration official who monitors the U.S.-Japanese relationship. “We do not know any other way of prying (the Japanese) market open.”

There is little sympathy among senior U.S. officials for the political predicament in which Hosokawa finds himself.

“We have tried to give him as much running room as we can,” a senior Clinton aide said.

Now, the official said, “we’ve told them: ‘The time is up.’ ”