U.S.-Japan Talks Continue as Trade Gap Grows

As American and Japanese officials continued discussions Friday on resuming formal trade negotiations, Japan announced that its trade surplus, the source of friction with its trading partners, rose 8.1% in April.

The snowballing surplus reached $11.12 billion last month--the fifth straight month of year-on-year rises in the overall surplus, Japan’s Finance Ministry said.

The surplus with the United States, Japan’s largest trading partner, rose for the second month in a row, surging 8.9% to $4.38 billion, the ministry said.

The growing trade imbalance was central to the “framework” trade negotiations between the United States and Japan, which collapsed in February.

Representatives of the two countries met in Washington on Thursday for the first time since the breakdown in an effort to restart the stalled talks.

After several hours of discussions Friday, talks were recessed so officials could consult with other members of their respective governments. A spokeswoman for U.S. Trade Representative Mickey Kantor said the talks would continue today.

The negotiations broke down over U.S. demands for numerical benchmarks for measuring progress in opening Japan’s markets. Japan says numerical targets would violate free-trade principles.

The Finance Ministry attributed the increase in the surplus in part to the Japanese yen’s steep rise in recent months.

Ministry officials said that in yen terms, the overall surplus in April fell 1.6% in its third straight monthly decline. The surplus with the United States dipped 0.9%.

The dollar averaged 104.43 yen in April, down 10% from a year earlier, they said.

Some economists believe a strong yen will cut Japan’s surplus in the long run by making Japanese products more expensive and thus less competitive overseas, and by making imports cheaper for Japanese consumers.

But Japan’s sagging economy has restricted consumer spending on both imported and domestic products.

Ministry officials said lower crude oil prices were another factor in the surplus.

With crude oil prices falling 21.2% to about $14.57 per barrel, oil imports fell 20.4% in value while the volume remained almost unchanged, they said.

Exports in April rose 7.1% from a year earlier to $32.89 billion, while imports increased 6.6% to $21.77 billion, the report said.

Among the export gainers in April were semiconductors and other electronics parts, up 31.8%; automobile parts, up 28.3%, and ships, up 62.4%, the report said.

For imports, semiconductors and other electronics parts rose 33.1%, clothing increased 19.3% and aircraft surged 140%, it said.