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. Last Updated: 07/27/2016

Japan Tries to Avert Sanctions

TOKYO -- Hoping to steal the initiative before Washington imposes trade sanctions, Japan is talking about producing market-opening measures on its own.


Trade talks between Prime Minister Morihiro Hosokawa and President Clinton in Washington collapsed last Friday, and U.S. officials say they are studying whether to impose sanctions over Japan's $50 billion trade surplus with the United States.


The threat of U.S. trade sanctions threw Japan's financial markets into turmoil Monday. Many dealers worry that the deadlock in talks meant the White House would immediately embark on a campaign to promote a stronger yen. Such speculation was rampant even though U.S. officials have denied plans for such tactics.


The dollar ended in Tokyo at 105.69 yen, compared with its New York close at 107.05/15 on Friday. It closed at the 105-yen level here for the first time since Nov. 15, 1993, when it closed at 105.79.


The Nikkei average closed off 531.45 points at 19,459.25. Other Asian stock markets tumbled as well.


It remains unclear what steps Washington might take in reaction to the breakdown in trade talks, but there have been indications that a first step in punitive sanctions could come as early as Tuesday. That is the deadline for a determination on whether Japan has lived up to a 1989 agreement on opening its cellular telephone market.


Some analysts see a risk that Japan and the United States may fall into a downward spiral of mutual retaliation. Hosokawa now clearly hopes to defuse the situation by moving forward unilaterally with measures aimed at trimming Japan's worldwide trade surplus, which hit $130 billion last year.


Foreign Minister Tsutomu Hata told a press conference Monday: "Both the Japanese people and the business world believe we need to be more open.


''Even if there's no (trade agreement), taking steps on our own will benefit the people and also contribute to shrinking" the surplus, Hata said, according to a ministry spokeswoman.


Hosokawa told leaders of his ruling coalition on Monday that he would like to have a package of measures ready by the time he meets Clinton at the July summit of the Group of Seven industrial powers, Japanese media said.


Hosokawa's apparent intent is to carry out many of the steps offered by Japan during the trade talks. In the fields of opening Japan's insurance market and government procurement of medical and telecommunications equipment, Japan had offered a variety ofderegulatory and open-bidding measures to increase foreign penetration. Japan had also offered to facilitate cooperation between Japanese and U.S. automakers to boost the import of U.S. automobiles and auto parts.