Time Running Out as Japan Trade Talks Deadline Looms : Commerce: Ten days remain before U.S.- threatened sanctions. No new talks have been set.

With the deadline for threatened U.S. sanctions looming, Commerce Secretary Ronald H. Brown said Wednesday that he still hopes for trade progress with Japan.

Just when is the question.

Tokyo has only 10 days left to open its public procurement market or risk U.S. sanctions proceedings--a threat that has helped keep world financial markets on edge and raised political hackles in Tokyo.

“We reserve the right to call off talks under the economic framework pact” if sanctions are imposed, one government official said Wednesday in Tokyo.

But few here detect signs of an imminent breakthrough, raising the specter of renewed trans-Pacific friction at a time of extreme fragility in world currency markets.

One Japanese official said Tokyo may pull out of the talks should Washington pounce, but that “would require a major political decision. We would have to consider the overall situation, including currency markets. It’s not that easy.”

Asked if there is any hope of averting sanctions, Brown responded, “It’s a very difficult situation to read.”

He said repeated political turmoil in Tokyo has hampered the trade talks, but he added, “We remain hopeful that we can make some progress.”

The first hurdle is July 31, the U.S. deadline for progress in opening up Japan’s public telecommunications and medical technology markets.

Thus far, insufficient progress has been made despite months of intense negotiations and an extra month’s leeway for Tokyo to help it ride out its political disruption.

With time now tight, a senior Administration official said the United States is open to talk more but conceded that nothing has been scheduled.

“The Japanese government has shown a willingness and interest in continuing discussions, and we welcome that,” he told a group of reporters, speaking on condition of anonymity.

He added that there has been no date set for new negotiations.

The aide refused to discuss the likelihood of U.S. action in the matter, but senior officials have said there is no deal yet and are downplaying prospects for progress this month.

“Obviously we understand the so-called deadline is July 31. We’re fully prepared to make a decision prior to that time. We have already had discussions in the Administration,” the senior official said.

Indeed there have been changes in attitude this past year, according to one well-placed source, who said the hawks have won the battle for now as “utter frustration” has set in about lack of progress in cutting Japan’s $131-billion surplus.