American officials said yesterday that few if any positive results are likely when the current round of trade talks with Nobuhiko Ushiba, Japan's special envoy to the U.S., ends on Thursday.
Undersecretary of the State Richard Cooper, at the end of the second day of talks, referred to them as "a first round" which won't be concluded for four to six weeks. He said he hoped it would be followed by succeeding rounds.
Thus, American officials indicated they were settling in for what may be a protracted series of negotiations before achieving their primary goal - elimination of the Japanese current account surplus.
The current account measures the effects of a nation's trade balance together with its balance of short-term investment earnings or payments. In Japan's case, the estimate is that it will run a global trade surplus of $16 billion this year. Its payments for insurance, shipping and related items reduce that number to a current account surplus of between $8 billion and $10 billion.
There were strong indications yesterday that Special Trade Representative Robert Strauss will not make a commitment to visit Japan until Ushiba returns and conveys to his government American dissatisfaction with the proposals he brought with him.
Strauss said after the first day's talks that Ushiba's proposals "fell considerably short" of what is needed to reduce the current account surplus. Aides to Strauss said he will seek an improvement in the Japanese proposals before making a trip to Tokyo to continue the dialogue.
Strauss' office revealed that a computer analysis of the Japanese proposals to ease trade restrictions confirmed the original U.S. impression that the package was "disappointing."
After meeting with Ushiba at the State Department yesterday and again for lunch, Cooper told reporters, "We regard Japan's position as somewhat fluid."
In his talks yesterday, Ushiba defended the package, arguing that the U.S. should consider not only the tariff cut proposals, but also the effect of the appreciation of the yen since the beginning of the year, and the potential impact of a stimulus package to boost the ailing Japanese economy, which is to be announced Dec. 21.
Ushiba met late in the day with members of the House Ways and Means trade subcommittee, who echoed the administration complaint that the package is inadequate.
Chairman Charles A. Vanik (D-Ohio) told Ushiba that the U.S. is "on the edge of a (political) precipice," and "What you have presented doesn't throw us enough of a line."
The Japanese envoy heard a similar analysis from Agriculture Secretary Bob Bergland, who told Ushiba that "hard, visible signs of progress" are needed to diminish growing protectionist sentiment in this country.
Ushiba reportedly responded that he had gained a better perception of the urgency with which the U.S. views the problem. U.S. officials said that putting that across to Ushiba and achieved one major U.S. purpose.
The Japanese have got to understand that they are the second largest trading economy in the world [WORD ILLEGIBLE] the Soviet aside, and the role they have to play in the world is willy-till very different from what it was when they were a relative small country," Cooper said.
He went to say that while the [WORD ILLEGIBLE] in Japan has come to understand the impact japan now has on the [TEXT ILLEGIBLE] Blumenthal, the American side rejected Ushiba's argument that japan is offsetting the [WORDS ILLEGIBLE] its foreign aid program.
The essential problem he warned Ushiba is that Japan's $8 billion to $10 billion current account surplus, added to the oil cartells $40 billion surplus, is creating an unwieldy debt burden for the deficit countries.
Nevertheless, the United States clearly has softened its original demand, posed in September by Cooper, that japan wipe out its current account surplus and move into deficit by the end of fiscal 1976.
C. Fred Bergster, Assistant Secretary of Treasury for International Affairs, said in an interview that the U.S. instead has stated its goal as a composite of three stages.
First, there would be a declaration by Japan of a political commitment to gun a current account deficit in the context of present International economic conditions. Second, Japan would be expected to show "real signs of progress." And third, there would be the ultimate elimination of the surlus.
Ushiba told members of the Vanik subcommittee that Japan estimates it would take more than two years to make a significant reduction in its current account surplus. Japanes officials stressed that Ushiba had said repeatedly in the past two days that Japan "does not feel it is absolutely necessary" for its current account to slide "in the red."