U.S. Moves Toward Japan Trade Sanctions : Commerce: Tokyo expresses willingness to keep talking, but not under the threat of punitive measures.

Increasing its pressure on Tokyo to settle an irritating trade dispute, the United States took steps Sunday to impose punitive measures if a 60-day negotiating period does not give U.S. companies a greater share of Japanese government purchases of telecommunications and medical equipment.

However, analysts said they did not think the United States really wants to impose such sanctions.

U.S. Trade Representative Mickey Kantor announced the measure after talks in Washington between U.S. and Japanese officials broke off Saturday, one day before a twice-postponed deadline to produce an agreement that would end what the United States says is Japan’s “persistent pattern of discrimination” against U.S. manufacturers in the two lucrative sectors.

Negotiations have been conducted, on and off, for nearly a year, since medical equipment and telecommunications gear were given a high priority.

“The time has come to use our trade laws . . . if necessary to address the question of continued discrimination against U.S. companies,” Kantor said in a statement.

In Tokyo, Chief Cabinet Secretary Kozo Igarashi said Japan is ready to resume trade framework talks with the United States but has no intention of continuing negotiations under U.S. sanctions pressure.

Igarashi told a news conference, however, that both countries agree the two sides have the will to continue framework talks to seek a solution to their differences.

“Even if trade talks on government procurement were to be canceled, other sectors under the framework talks should be maintained,” he said.

In Tokyo markets, the dollar fell sharply this morning, opening at 98.45 yen, down 1.48 yen from Friday’s close, but it recovered to 98.95 yen by midday. Stocks were mixed.

U.S. and Japanese officials have said that the obstacle to reaching an agreement is determining acceptable “qualitative and quantitative” criteria for measuring the U.S. penetration of the Japanese market.

The Japanese object to any effort to set specific goals, fearing they could become mandatory targets that, if not met, could lead to the imposition of sanctions in the form of U.S. tariffs on Japanese products sold in the United States or quotas limiting such sales.

The United States insists that the two nations arrive at some system that will provide a clear measure of whether foreign companies are able to penetrate the Japanese market.

The procedures announced Sunday provide that if an agreement is not reached within 60 days, the Clinton Administration has the authority to raise tariffs on certain Japanese products shipped to the United States, a step that would probably lead to higher consumer prices for those items.

While the threat of sanctions would suggest that the difficult U.S.-Japanese trade relationship is headed for new depths, neither side expressed great concern.

Jeffrey Young, an analyst with Salomon Brothers Asia Ltd. in Tokyo, said Japanese negotiators appear confident that Washington does not really want to impose sanctions. Some analysts in Tokyo, he noted, believe sanctions would hurt the United States more than Japan.

U.S. officials cite what they say is a need to apply strong pressure on Japanese negotiators, and Japanese officials expressed the expectation that the talks would resume in September before any sanctions are imposed.

For more than 15 years, the United States and Japan have been engaged in a running dispute over whether the Japanese government, in its own purchases, has frozen out foreign suppliers.

The controversy is just one element among many straining U.S.-Japanese trade relations. U.S. firms also complain that Tokyo is frustrating their efforts to sell cars and car parts, to gain a firm foothold in construction and a bigger share of insurance and investment.

Kantor’s office said sales by foreign companies make up 25% of the average domestic private and public telecommunications market in the industrialized world but that the foreign share of this $10-billion market in Japan is 5%.

U.S. manufacturers hold 40% of the medical technology market in the European Union, the trade office said, but their share in Japan is less than half that.

Kantor said four factors hamper foreign suppliers in competing for Japanese government contracts:

* Limited access to early information on upcoming procurements.

* Reliance by government agencies on an informal network of Japanese companies.

* Insufficient consideration of the technical merits of foreign bids.

* Development of technical specifications in telecommunications that favor local companies.

Times staff writer David Holley in Tokyo contributed to this article.