Key members of Japan's ruling political party, here for the inauguration, have told Reagan administration trade officials that Japanese manufacturing capacity would limit their auto sales in the United States even if existing quotas were removed.
The limit would be around 2.5 million cars a year, which is 650,000 more cars than are currently allowed into the country under a four-year so-called voluntary restraint agreement that ends March 31, the Japanese visitors said.
They also said the Japanese auto makers want the quotas removed despite reports here that some of them preferred continuing the restrictions because of the large profits they have been making. The American auto makers are split on quotas; General Motors wants them removed while Chrysler and Ford favor extending them.
Administration officials and private trade specialists reacted skeptically to the idea that Japan's auto exports would remain limited by production capacity. They felt that Japanese auto makers could not resist increasing their capacity if they could sell more cars in the American market.
Nonetheless, U.S. trade officials took the comments by leaders of Japan's ruling Liberal Democratic Party (LDP) as a signal to the Reagan administration that letting the quotas die would not mean a flood of Japanese imports that would hurt American auto makers.
The party officials, who included Susumu Nikaido, vice chairman of the LDP, and Yoshiro Hayashi, a former minister of health and head of the committee of the Diet (parliament) that handles trade frictions, met with U.S. Trade Representative William E. Brock and Commerce Secretary Malcolm Baldrige.
The question of whether to renew the restraint agreement is one of a number of trade issues confronting Tokyo and Washington in the wake of the Los Angeles meeting three weeks ago between President Reagan and Prime Minister Yasuhiro Nakasone. Trade problems dominated the meeting, as Japan holds a $34 billion trade surplus with the United States.
Five senior administration officials will leave for Tokyo Monday for extensive follow-up talks on ways to open Japan's markets in four key areas -- telecommunications, computers, wood products and prescription drugs and sophisticated medical equipment. These talks, which will focus first on telecommunications, are being held at the undersecretary level to underscore the administration's seriousness.
In Japan, meanwhile, the Tokyo Shimbun newspaper reported yesterday that Japanese officials oppose most of the U.S. proposals, including a request to buy American satellites. But the paper said the officials had taken a "positive" position on buying American telecommunications equipment and accepting data from foreign laboratories for licensing new kinds of medical equipment.
During his visit here, Hayashi told trade specialists that actual Japanese auto exports to the United States will fall "far short" of 2.5 million cars even if the restraints are lifted. That limit will be maintained, he continued, because of the inability of auto makers to increase production quickly and the knowledge that being "over greedy" could "backfire" and lead to more stringent American protectionist measures.
He also suggested that the government's Ministry of International Trade and Industries could "intervene" if Japanese auto exports go too high.
But he was vague on how long these new restraints based on production capacity would last, preferring, he said, to allow those questions to depend on the demand for new cars.