Japan Alludes to Non-Binding Trade Targets : Asia: Hosokawa aide says such goals could win approval, heading off more conflict with the U.S.

Ichiro Ozawa, chief strategist of Prime Minister Morihiro Hosokawa’s coalition, suggested Tuesday that Japan could accept non-binding targets in its trade with the United States instead of the specific goals, backed by the threat of sanctions, that Washington is demanding.

Without elaborating, Ozawa flatly predicted that the U.S.-Japan trade “problem will be brought to a conclusion next month.”

Ozawa, the No. 2 leader and policy-maker of the Japan Renewal Party, made his comments at a news conference with foreign correspondents.

“Accepting numerical goals to be implemented by the government is, indeed, managed trade,” he said, referring to the practice of government dictating to private industry. “However, if you are talking about mutual goals for efforts, that’s not a bad thing.”

At a Feb. 11 Clinton-Hosokawa summit in Washington, the Japanese officials rejected U.S. demands, saying that setting specific goals for reduction of Japan’s trade surplus with the United States would be undesirable.

The failure to achieve agreement in Washington raised the specter of a tit-for-tat trade war. But since Hosokawa’s return to Japan, his government has been discussing ways to encourage more American imports, thereby cutting Japan’s trade surplus.

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And despite the lack of formal negotiations, Ozawa’s comments, coming from a key powerbroker in the coalition, reflect a continuing Japanese effort at compromise.

In Washington, a spokesman for the Office of the U.S. Trade Representative said the agency had no immediate comment on Ozawa’s statement.

Ozawa blamed the impasse at the Washington summit on a mixture of the United States’ “incorrect” insistence on numerical targets and Hosokawa’s troubles at home in winning approval for a historic political reform plan. The prime minister, he explained, did not have enough time to make domestic “political adjustments” before he met Clinton.

“Once this problem is taken care of, Hosokawa’s leadership will become very firm, and Japan-U.S. adjustments will become possible,” Ozawa said.

Any economic damage Japan might suffer from U.S. sanctions would “not amount to much” in the near term, he said.

Nonetheless, Ozawa warned that any U.S. resort to sanctions would “only stir up nationalism in both countries.”

He added: “America must not carry out sanctions--unless it intends to destroy Japan and once more repeat the history of U.S.-Japan relations.”