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. Last Updated: 07/27/2016

U.S. Sets Deadline for Japan

WASHINGTON -- The U.S. government, shrugging off concerns that tough talk on trade is driving down the dollar's value, is starting the clock ticking toward possible sanctions against Japan.

The Clinton administration on Sunday gave formal notice that it will move to impose trade sanctions against Japan if further talks over the next 60 days fail to produce an agreement.

At issue are U.S. demands for the Japanese government to expand purchases of telecommunications products and medical equipment -- two industries where U.S. companies are recognized world leaders.

In making the announcement, U.S. Trade Representative Mickey Kantor said he was taking action because of "Japan's failure to address longstanding discrimination against United States suppliers."

The announcement came after Japan had dispatched a high-level negotiating team to try to resolve the dispute.

It marked simply the latest failure in a year-long battle between the two nations to lower Japanese trade barriers under an exercise known as the "framework" talks.

Other negotiating groups are working to open Japan's markets for such key U.S. industries as autos, auto parts, insurance and financial services. However, all of the negotiations are bogged down over the issue of how to measure progress.

The United States is insisting that after years of often-futile discussions with the Japanese it will not accept new agreements unless they contain "quantitative" and "qualitative" indicators to judge how much U.S. imports are increasing.

The Japanese have blasted this as "managed trade" and insisted they will never agree to what they term "numerical targets."

The dispute has intensified since a summit meeting between President Bill Clinton and then-Prime Minister Morihiro Hosokawa ended in acrimony in February with a collapse of the framework negotiations for three months.

They resumed again in May but to date have resulted in no market-opening agreements.

The lack of progress has been cited as one of the factors leading to a steep decline in the value of the dollar in recent weeks, as currency markets became convinced a weaker U.S. currency was the only solution to America's yawning $59 billion trade deficit with Japan.

Clyde Prestowitz, a former top trade negotiator in the Reagan administration and now head of the Economic Strategy Institute, a Washington think-tank, said that the administration was right to keep up the pressure on Japan.

"The bottom line is that the bureaucrats and big Japanese companies have a lot of vested interests in the status quo," he said. "They won't abandon those positions until they are pressured to do so."

The administration has set Sept. 30 as a deadline for deciding which countries have erected the most harmful barriers to U.S. products, under a feared section of U.S. trade law known as Super 301.

Japanese government spokesman Kozo Igarashi said Monday that Japan was ready to resume talks, but would cancel the discussions if sanctions were imposed at the end of September.

"The government is ready to continue energetic and steady negotiations. However, we have no intention to negotiate under sanctions pressure," Igarashi said.

In Tokyo, a Japanese official, who spoke on condition of anonymity, said the government hoped to resolve the telecommunications and medical product talks before the Sept. 30 deadline.

Analysts say it is in the interest of both to avoid a major blow-out at the end of September.

"If they don't get an agreement, both sides will be in trouble," said Soichi Enkyo, senior Bank of Tokyo economist.

On a separate trade issue, negotiators reported no breakthroughs over the weekend in talks with Canada aimed at limiting Canadian wheat shipments into the United States.

Such sales, primarily of durum wheat made in making pasta, jumped 64 percent in the past year to 2.5 million metric tons.

U.S. farmers have complained the increase is costing them millions of dollars of lost sales and have pressed to cap shipments at around 1.5 million metric tons.

However, pasta makers have argued that the surge was temporary, related in part to last year's floods and that any quotas or higher tariffs on Canadian wheat would force consumers to pay higher prices.

Kantor has said that without an agreement to limit Canadian shipments of wheat, he would forward a list of recommended trade sanctions to Clinton by today. There is no deadline on when Clinton would have to decide the issue.

(AP, Reuters)