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Marathon Japanese Auto Trade Talks Hit Impasse

By James Gerstenzang
Los Angeles Times

Talks intended to pry open Japan's market to American autos and auto parts entered their final stage Wednesday with negotiators reporting no major movement toward a settlement that would avoid massive U.S. tariffs on Japanese luxury cars.

The negotiators, led by U.S. Trade Representative Mickey Kantor and Ryutaro Hashimoto, the Japanese minister of international trade and industry, met into the early morning hours at a Japanese diplomatic mission on a hillside overlooking Lake Geneva.

"I don't think anything has changed," one downbeat U.S. official close to the talks said late Tuesday night, echoing negotiators who reported that a wide distance separated the two sides as Kantor headed for his third one-on-one meeting of the day with Hashimoto.

The pessimism underscored a pervading sense that the United States and Japan are on a collision course, with no assurance that either will veer off at the last minute to avoid what threatens to be the worst trade fallout between the two allies and economic rivals since World War II.

Unless an agreement is reached Wednesday, the Clinton administration has vowed to impose the stiffest trade sanctions in the history of U.S. trade with Japan - a 100 percent tariff on 13 models of Japanese-made luxury cars.

In talks that lasted all day and night, Kantor, Hashimoto and their top aides met repeatedly in a modern, block-like building that borders on a cemetery and a small orchard. They then retreated to reassess their positions among their larger delegations, before resuming direct talks.

Before the evening session began, a U.S. official said the two sides had "crystallized the issues, and there is a much clearer understanding of what the issues are."

Such a clarification would be a necessary step before reaching an agreement, the aide said, but added that the clarification would not necessarily lead to an agreement.

"It's going to be a long night," predicted Ira Shapiro, Kantor's general counsel who has been deeply involved in the negotiations.

And Hashimoto, who emerged from one private session with Kantor to report "it was a very friendly fight," said he has never been optimistic about the outcome.

But officials took pains to avoid any detailed discussion of the issues or the current offers, preferring a course set by Kantor that one aide said seeks to avoid "informed speculation about what is on the table and why."

Earlier Tuesday, word was circulated that President Clinton had already set aside time Wednesday - the day when the sanctions could take effect - to deliver a tough public message to the United States about the dispute. U.S. officials in Geneva acknowledged that the disclosure was an element of public diplomacy intended to make it clear to Japanese negotiators that the White House had no plan to back down, and that the deadline would not be shifted.

Although the negotiators have been meeting under the gun of Wednesday's deadline, it is an imprecise deadline at best.

Only the day, not a specific hour, has been specified for the U.S. Customs Service to begin collecting the 100 percent tariff rather than the 2.5 percent tariff now charged on imported luxury automobiles. In any event, the Customs Service said it would begin collecting the taxes whenever Kantor gives the order.

"The Federal Register (in which the government publishes notice of such regulations) is silent as to time," said Anne R. Luzzatto, Kantor's spokeswoman.

Moreover, the U.S. delegation has not said it would refuse to negotiate after the sanctions go into effect, although Kantor is committed to travel to Denver on Thursday for an unrelated trade meeting. And Hashimoto, suggesting a readiness to continue talking, has emphasized that the deadline was imposed by the United States, not Japan.

Clinton, whose sanctions policy was challenged Tuesday during an economic development conference in Portland, Ore., sounded defensive when he responded to a questioner there:

"I am not trying to launch a new era of protectionism, but we have tried now for two or three decades to open this market, and this is the last major block to developing a sensible global economic policy.

"The bottom line is we want to open the markets for American products. And we will take action if necessary in the form of sanctions. We hope it will not be necessary," the president said.