U.S., Japan to Open Trade Talks : Pacific Rim: In effort to end stalemate, the two countries will try to close gap before a July summit.

From Reuters

The United States and Japan will open exploratory trade talks Thursday in a drive to end their negotiating stalemate and strike a new economic deal, U.S. Trade Representative Mickey Kantor said Monday.

Both sides are scrambling to close the trade gap before a July economic summit, aware that their public agreement to disagree in February badly hurt financial markets.

This led to Thursday's scheduled meeting.

"We'll explore whatever they will come up with," Kantor told reporters. "We have not re-engaged (the trade negotiations) but we are exploring various options that the Japanese seem to be bringing with them this week."

"We will expect a good and serious and far-reaching and far-ranging conversation, and we will explore every alternative," Kantor said.

A senior Administration official said Japan's delegation would stay three or four days. The team is expected to include the vice-ministers of foreign affairs and trade.

"We are obviously hopeful that the talks will get back on track, but the ball's in their court," said the official, who requested anonymity. "We don't want to go down the track only to see it fail again. Our goal has not changed."

Last week, in the first glimmers of movement after three months of official limbo, the two sides agreed to try to find a way to resume their negotiations.

Japanese International Trade and Industry Minister Eijiro Hata said he would send vice ministers to probe the possibilities.

Foreign Minister Koji Kakizawa telephoned Kantor and said he would like to come in person to break the impasse, official sources said.

Kantor was reportedly receptive, although such a high-level meeting would depend on the outcome of Thursday's talks and on Kakizawa's fragile political situation.

While the United States and Japan agree their $60-billion trade imbalance must be cut, they have parted ways over how.

The main bone of contention is the U.S. insistence on "objective criteria" to measure progress on opening Japan's markets, a stance that Tokyo dismisses as quotas in disguise.

When the two sides declared failure at their Feb. 11 White House summit, they opted to lie low for fear of a second public breakdown. The three-month hiatus has cost both sides.

For Japan, it has driven up the value of its currency; for Washington, it has helped boost interest rates.

Financial markets believe that without a concrete market access deal, the Democratic White House would try to "talk up" the yen to price Japanese exports out of the market.

President Clinton's top economic adviser, Robert E. Rubin, insisted again Monday there is absolutely no U.S. strategy of suppressing the dollar against the Japanese yen.

Despite reports that Clinton has toned down his demands from Japan, which is lurching from political crisis to crisis, Rubin said the President still wants a strong deal in line with last year's so-called framework accord.

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