Japan Market Issues: Time Running Out : Trade: Ambassador says sanctions hinge on results of high-level meetings. President Clinton plans to join efforts for accord.

The United States hopes to resolve several contentious trade issues with Japan without resorting to sanctions at the end of the month, but the two sides remain far apart, Walter Mondale, U.S. ambassador to Japan, said Tuesday.

Mondale said the outcome of high-level meetings over the next several weeks will determine whether trade deals can be reached by Sept. 30, the U.S.-imposed deadline.

“We have been urging Japan to open its markets, reduce its excessive global surplus and deregulate its economy,” he told the National Press Club. “This will benefit the world, the U.S.--but most of all, it will benefit the Japanese people, who, because of these barriers, now pay an average of 40% more for tradable goods and services than do citizens of other industrialized countries.”

Mondale disclosed that President Clinton plans to meet Sept. 27 with Japanese Foreign Minister Yohei Kono in New York, where both men will be attending United Nations sessions.

Kono is Japan’s chief negotiator in the so-called framework talks. The talks, aimed at lowering Japan’s trade barriers in a number of key areas, have dragged on for 15 months with little success.

Japanese Trade Minister Ryutaro Hashimoto was scheduled to meet here today with U.S. Trade Representative Mickey Kantor.

The framework talks are currently focused on insurance, autos and auto parts, and Japanese government purchases of medical and telecommunications equipment.

The United States has said that unless there is agreement on medical and telecommunications equipment by Sept. 30, it will begin the process of imposing sanctions against Japan.

The Administration has threatened additional sanctions in other areas under Super 301, a revived portion of U.S. trade law that allows the President to single out countries determined to have erected harmful barriers to U.S. products.

Mondale said the trade dispute is threatening to spill over and sour other aspects of relations between the world’s two largest economies.

He said there has been some progress on the government procurement issue but not enough to satisfy U.S. demands. Both sides appeared close to agreement on insurance, where American companies are seeking greater access to the vast Japanese market, he said.

But Mondale said the two sides remain far apart on U.S. demands that Japan lower barriers to sales of American cars and that Japanese auto makers start buying more parts from U.S. suppliers.

Sales of Americans cars and trucks in Japan rose to 8,291 units in August, an 82.3% increase over a year earlier, an auto trade group announced Tuesday in Tokyo.

Mondale said those figures are not a sign of major progress, given that American car sales remain a tiny fraction of the Japanese market compared to Japan’s sizable hold on the U.S. market.

Mondale said he remains hopeful that agreements can be reached and sanctions avoided, but he refused to estimate the odds for success. With the deadline approaching, the pace of the negotiations is accelerating. After his meeting with Hashimoto, Kantor is due in Los Angeles for a conference with Kono on Thursday, in advance of three days of meetings among trade officials from the United States, Japan, Canada and the European Union.