Clinton Softens His Hard-Line Stance on Japan

In yet one more twist in unsettled U.S.-Japan relations, President Clinton eased away Friday from the hard-nosed approach his Administration has taken in its trade disputes with Tokyo.

While admitting that Japan has not done enough in the past year to open its markets to U.S. products, Clinton said it is “difficult to imagine” how progress could have been made in the chaotic Japanese political climate.

The President’s statements came after a 1 1/2-hour meeting with Tomiichi Murayama, the new Japanese prime minister, on the eve of the annual summit of the major industrialized democracies. They represented a sharp shift in the Clinton Administration’s approach toward Japan--despite any clear progress in trade talks. The most recent U.S.-Japan summit broke down in bitterness in February.

At the same time, Clinton received a pledge from Murayama, Japan’s first Socialist prime minister since 1947, that the new government will support the United States’ effort to stem North Korea’s nuclear program.

“We shall continue with the foreign policy that our past governments have maintained,” Murayama said.

Later, during a rich Neapolitan dinner with Clinton and the summit leaders, the 70-year-old Murayama fell ill and was briefly hospitalized for treatment of what was described as fatigue, dehydration and diarrhea.

Murayama--who has traveled only a little overseas, has almost no experience in top-level global diplomacy and was said to be ailing even before he arrived here--was given fluids and released from the hospital.

It was unclear whether he would take part in the full day of meetings planned for today.

On Friday, a senior U.S. official asserted that Murayama’s support was expressed in “very emphatic terms” and that the prime minister had made it “clear that they would support whatever action was required at the United Nations” against North Korea. It was not known what impact the death of North Korean leader Kim Il Sung, announced today, would have on the nuclear standoff.

The suddenly relaxed approach to trade issues with Japan was but one of the new turns that emerged during Clinton’s day in this industrial port city in the shadow of Mt. Vesuvius:

* In a statement that senior Administration officials later sought to modify, the President stepped into volatile international currency problems by urging currency traders to focus on long-term economic fundamentals, which he maintains are healthy, rather than overreacting to the recent fluctuations--mostly downward--in the value of the dollar.

His remarks suggested that America would not intervene in the future to prop up the dollar, which has lost roughly 20% of its value, measured against the Japanese yen, since he took office.

But the comments sent the dollar into a tailspin. In trading Friday, the U.S. currency hit a record low against the Japanese yen and fell dramatically against the German mark and the Swiss franc.

* Officials said the United States will pursue a new international trade initiative intended to remove impediments to greater global commerce in areas such as financial services and intellectual property, as well as the fruits of such wide-ranging creative endeavors as music recording and development of pharmaceuticals.

Clinton has invited partners at the economic summit to embark on a yearlong study of the issue.

But the focus of the day was Clinton’s conference, in a Spartan hotel room, with the new Japanese leader.

In two ways, the meeting eased the Administration’s fears as it begins to deal with the fourth Japanese government since Clinton took office 1 1/2 years ago: Friday’s session clarified that Japan’s new government would not differ greatly in matters of national security from its predecessors, and it offered assurances that Japan would pursue economic policies favored by Washington, even if trade disputes remain intractable.

The Japanese Socialists’ approach toward issues on the divided Korean peninsula had been more relaxed over the years than that of the long-ruling Liberal Democratic Party; that reality had raised some Americans’ concerns as to whether the new Japanese coalition government would adhere to past policies.

Economic issues in general--and trade matters in particular--remain the most troubling element in the Washington-Tokyo relationship.

On those topics, despite the more friendly tenor of the President’s remarks after last winter’s flare-up, officials said major differences remain. Privately, the Administration is insisting on progress; publicly, it is presenting a more moderate front.

Asked whether Japan has made sufficient progress since the current round of U.S.-Japan trade talks was established in the 1993 economic summit conference in Tokyo, the President replied, “My candid answer would have to be no.”

But, he said, Murayama had “basically run through the last year of Japan’s very interesting political history with me in a way that, frankly, increased my own understanding not only of what has happened but of the nature of this present coalition government.”

“It is, frankly, difficult to imagine how the hard issues that are the subject of the framework talks could have been resolved against a background of as much political change as the nation has sustained in the last year,” he said.

The framework talks cover automobiles and auto parts, medical equipment, telecommunications and insurance. They resumed in recent weeks after being broken off in February when negotiators failed to make progress.

They are in recess during the summit weekend while Clinton meets with the leaders of Britain, Canada, France, Germany, Italy and Japan.

If Clinton’s words suggested that he is letting Japan off the hook after his Administration has spent much of the past year hammering away at Tokyo’s trade policies, the President also said he is “looking forward to . . . a resumption of the talks in good faith and continued progress.”

What lies behind the seemingly kinder, gentler approach, a senior White House official said, is not only a recognition of the turmoil that brought Murayama to power but a reluctance “to whack him over the head” this early in his tenure. Murayama took office June 30.

But, the official said, “we learned we need to do what the Japanese do: Say nice things, but move forward strongly.” He added: “No one should have any illusions here. Nothing’s changed at all. We know what actions need to be taken.”

The Administration is hanging its latest approach to the troublesome Japan trade question on the new government’s assurance that it will not undo a one-year reduction in the Japanese income tax--at least until there are solid signs that a fledgling economic recovery is firmly rooted.

But comments by U.S. and Japanese officials left unclear whether, and when, there would be an increase in Japan’s “consumption tax,” in effect a sales tax, to make up for lost income-tax revenue. The President and his aides have argued that Japan needs to cut its taxes so consumers will have more money to spend on U.S. products, thereby trimming Japan’s $60-billion trade surplus with the United States.

Treasury Secretary Lloyd Bentsen, who joined the meeting, said he specifically asked the Japanese about their commitment to maintaining the tax cut and “was satisfied” with the response.

Times staff writer Tyler Marshall contributed to this report.