TOKYO, JUNE 13 -- Foreign Minister Taro Nakayama will tell Secretary of State James A. Baker III later this week that Japan does not intend to offer further substantive concessions to the United States in the next round of trade talks set for this month, a senior Japanese official said today.
Nakayama and Baker are scheduled to meet in San Francisco on Friday.
"Our basic position is that the fundamental structure is laid down in the interim report, and we are faithfully and sincerely implementing that process, so everything is going fine," the official said, referring to the report the two countries issued in April on their continuing talks on trade frictions known as the Structural Impediments Initiative.
But U.S. officials have said the interim report is only a "way station," as White House spokesman Marlin Fitzwater put it at the time. The officials in Washington have complained that Japan is refusing to advance the talks, endangering a two-month-old truce in the trade war.
The positions being staked out in the two capitals indicate that the United States and Japan may be headed for another confrontation in their trade relationship as Washington looks for more concessions and Tokyo says it has given enough.
"We are now in a critical stage," Foreign Ministry spokesman Taizo Watanabe said Tuesday. "There are a number of problems to be solved."
The structural reform talks -- which Fitzwater has said "may be unique in the history of bilateral trade and economic discussions" -- are meant to reduce Japan's $45 billion annual trade surplus with the United States by changing fundamental aspects of both societies. The United States promised that Americans would save more money, improve their schooling and try harder to export, while Japan pledged to open its economy to more competition and spend more to upgrade daily life in the country.
The April 5 interim report, based on about eight months of often tense negotiation, contained dozens of promises from both sides while committing to "further progress." Negotiators are to hold another session June 25 and 26 in an effort to draft a final report before the July 7 summit meeting in Houston of leaders of major industrialized nations.
But Japan and the United States now disagree on the meaning of "further progress." The Japanese official today said it means only tying loose ends left in the interim report and making certain promises more concrete. "The blueprint is already there, and neither side is supposed to add extra buildings," the official said.
In addition, since the interim report was signed, some Japanese officials have begun to say that Japan's trade surplus, which has fallen sharply in the past two years, is now at an "appropriate level" and needn't be reduced further. Such views do not represent official policy, however, the official said today.
U.S. and Japanese officials differ on at least three issues: how promises made in the final report should be monitored and enforced, how to strengthen Japan's anti-monopoly laws and how much Japan should increase its public works spending.
Washington wants Japan to commit to spend a certain percentage of its gross national product on public works, arguing that an increase in such spending would suck in imports. Japan has agreed to commit to spend a certain amount during the next 10 years, but not a fixed percentage of its GNP, saying it cannot afford such inflexibility in fiscal planning.
"That was settled in the interim report," Prime Minister Toshiki Kaifu said Friday. "I don't quite understand why they are raising the topic again."
Japan promised to increase penalties for bid rigging and other anti-competitive behavior, which the Americans argue works against foreign firms, but the extent of the new sanctions remains an issue.