A top federal policy group yesterday urged President Reagan to initiate legal action against Japan on the grounds that it is unfairly closing its multibillion-dollar construction market to U.S. companies.
The Trade Policy Review Group, which is composed of senior staff members from various federal agencies, voted unanimously to recommend the move that would raise the stakes in negotiations with Japan.
It was not clear, however, whether Reagan would take any action or whether the group's move was intended mainly to produce bargaining leverage with the Japanese. The recommendation still must be endorsed by the Cabinet-level Economic Policy Council before going to the Oval Office for Reagan's consideration.
The advisory group recommended that Reagan invoke Section 301 of the Trade Act of 1974. That would set in motion legal proceedings to determine whether Japan was engaging in an unfair trade practice. If unfair trade practices were found, the law would allow the president to take a broad range of retaliatory actions.
Usually, such proceedings originate through complaints from U.S. companies that claim injury from the practice in question. The policy group, however, is recommending that the administration "self-initiate" the complaint, an action it has taken only rarely and which is considered a last-ditch measure with weighty political implications.
In any case, the United States has imposed sanctions against Japan on the construction issue in the form of a congressionally ordered ban on Japanese companies -- barring them from taking part in new federal public works contracts. The ban is to remain until the United States determines that the Japanese market has been opened sufficiently.
Yesterday's action followed new talks on the issue in Tokyo last week. The talks ended inconclusively, but dialogue is expected to resume soon, probably in Washington.
Japan has conceded that its bidding system may discriminate against foreign companies because it requires that they have prior experience in Japan. The Japanese government has agreed to waive that requirement for bidding for a certain number of projects to give foreign companies a chance to bid and, if they win, build a track record for later competition under the prior-experience rules.
But the two sides are far apart on the type and volume of work to be covered by the waiver.
Construction first emerged as an important trade issue during talks about Kansai International Airport, an $8 billion facility that is being built on an artificial island off the city of Osaka.
U.S. companies have so far received only token contracts there.
The talks subsequently expanded to cover Japanese public works in general, which by some estimates could total about $60 billion over the next 10 years.
Sen. Frank Murkowski (R-Alaska), a sponsor of the congressional ban, welcomed the group's move.
"I'm pleased to see that they realize the gravity of our current situation with Japan," he said in a statement.