Japanese Prime Minister Takeo Fukuda and his key economic ministers are expected to approve a $13 billion stimulus package at a meeting in Tokyo todays, according to U.S. officials.
About half of the money would be spent on public works, and an additional 30 percent would go into housing American officals welcome the emphasis on construction projects, believing it will stimulate consumer demand and give Japanese maunfacturers an incentive to boost domestic rather than export sales.
In turn, these moves are expected to reduce the Japanese balance of payments surplus, running at an embarrassingly high $20 billion level.
Meanwhile, special trade envoy Nobuhiko Ushiba and Africulture Minister Ichiro Nakagawa are scheduled to begin a three-day meeting here on Tuesday with SPecial Trade Representative Robert S. Strauss on the touchy issue of Japanese import restrictions on beef, citrus and other agrigultural products.
Officals anticipate that the Japanese negotiators will offer a relaxation of beef and orange quotas. But the United States is demanding more than a doubling of the quotas, and it is not clear whether the Japanese are ready to make that much of a concession.
The expected budgetary expansion program is designed to fulfil Fukuda's commitment at the Bonn summit that Japan would achieve a real growth of 7 per cent in its gross national product for the 12-month period ending March 31, 1979.
American officials have left all along that some new Japanese stimulus, comparable to the post-Bonn Summit program announced by the West German government, was critical to the achievement of the 7 percent figure.
At Bonn, Fukuda promised to keep the problem under review and to call a special session of the Diet if a supplemental program became necessary. Earlier this week, the Japanese Economic Planning Agency reported that the real growth rate in the 1st quarter (April-June) of the Japanese fiscal year had slipped to less than 5 per cent at an annual rate.
U.S. officials had been hoping that the Japanese might put in an expansion program of more than $20 billion, or about 4 trillion yen. The expected $18 million amount, which works out to about 2.5 trillion yen, would nevertheless be considered to be a substantial effort because enough of it is concentrated in "hard" program like public works and housing.
Other parts of the stimulus package will probably include a sizable jump in foregin aid, and special programs for destressed regions or industries.
We'll be looking to see whether the budget promotes an increase in demand, or whether a lot of it is designed to offset the appreciation of the yen," a high U.S. official said. "If they try to subsidize exports, that would be counterproductive."
On the problem of agricultural imports, the Japanese government, responding to protectionist pressures at home, has been resisting Strauss' demand that quotas on citrus and beef be eliminated entirely. The American position is that these quotas are illegal under the GATT (General Agreement on Tariffs and Trade).
Japan in the past few months boosted quotes substantially to allow importo of $45,000 tons of oranges and 90,000 tons of beef per year.
"We find their arguments irritating," said Deputy trade representative Alan Wolf. "They usually ask why they should import what they can produce domestically. But if we followed that line of argument, there wouldn't be much trade. In that sense, we wouldn't 'need' their autos or color TV sets."
During next week's negotiations, the United States will also ask the Japanese delegation to lower tariffs on pork, chickens, egg products, corn oil, grapefruit, walnuts, canned peaches, raisins, olives, and wine.