JAPAN, U.S. SET TO BEGIN HIGH-LEVEL TRADE TALKS

  Japan and the U.S. Kick off top-level
  trade talks tomorrow amid signs officials from both sides are
  growing increasingly irritated with each other.
      The talks, held annually at sub-cabinet level to review the
  whole gamut of U.S./Japan economic relations, will pave the way
  for American Secretary of State George Schultz's one day
  stop-over here at end-week on his way home from China.
      Faced with growing Congressional protectionist pressure,
  the U.S. Administration is pressing Japan for speedy action to
  reduce its still huge trade surplus, U.S. Officials said.
      "We appreciate their frustration," a senior Japanese
  government official said. "But we are also frustrated."
      The official said the 40 pct rise of the yen over the last
  18 months has hit Japan hard, forcing exporters to slash
  spending and lay off workers to make up for lost sales abroad.
  That has not yet shown up in dollar-based statistics on trade,
  but it will, he said.
      He said the U.S. Administration was ignoring the progress
  that has been made and instead emphasizing the problems that
  remain when it talks with Congress.
      "It would only take five minutes to list their
  accomplishments," a senior U.S. Official replied.
      The talks begin tomorrow with high-level discussions on the
  economic structures of both countries and how they affect the
  bilateral trade imbalance, which last year amounted to 51.48
  billion dlrs in Japan's favour.
      On the following two days, the topics will range from
  multilateral trade talks under the auspices of the General
  Agreement on Tariffs and Trade (GATT) to such bilateral trade
  problems as super computers.
      The structural talks are intended to be free-wheeling
  discussions among senior officials. Tomorrow's topics include
  savings and investment issues such as consumer credit and
  housing, and the implications of government budget deficits.
      These talks come at a particularly delicate time for the
  Japanese government, which is facing increasing domestic
  pressure to abandon its tight-fisted fiscal policy and
  stimulate the sagging economy by spending more.
      Some U.S. Officials complained Japan has no intention of
  boosting domestic demand and imports, as Washington wants.
      Japanese officials in turn pointed the finger at the huge
  U.S. Budget deficit as one of the main culprits for the trade
  imbalance. That budget deficit has meant that the U.S. Is
  buying more imports.
      Japan seems particularly peeved at being singled in a draft
  trade bill before the Senate as a nation following adverserial
  trade practices. "It condemns Japan without due process," one
  Japanese official said.
      That reference spoils what is otherwise a well-thought-out
  bill introduced by Democratic Senator Lloyd Bentsen, he said.
      Japan is also not totally happy with the administration's
  trade bill, particularly its proposal to establish reciprocal
  access to foreign markets as one criteria for retaliatory trade
  action by the U.S., Officials said.
      Nevertheless, Japanese officials said they remain in a weak
  bargaining position, especially with the threat of a trade bill
  overhanging them.
      "We have no leverage," one official admitted.
      As a result, Tokyo is striving to meet U.S. Complaints
  about its trade practices in a variety of fields, including
  super computers.
      The U.S. Is pressing for greater access to the Japanese
  super computer market.
      The Japanese government has sent a long questionnaire to
  public institutions like universities which buy the
  sophisticated machines in hopes of eventually setting up
  informal bidding procedures easily understood by all potential
  sellers, officials said.
  

