The American Embassy here is investigating whether U.S.-licensed technology was involved in a Japanese steel firm's delivery of equipment for the Soviet natural gas pipeline last month. The case has raised concerns here that the Reagan administration may seek sanctions against the company and embroil Tokyo in its bitter confrontation with Western Europe over pipeline sales.
A spokesman for Japan Steel Works, a leading producer of large steel castings, acknowledged that the company shipped about $2.3 million worth of pipeline valves to the Soviet Union. He confirmed a long-standing licensing agreement for valve production with Grove Valve and Regulator of Oakland, Calif., but denied that the shipment in question contained any American technology.
The American Embassy declined comment pending results of its investigation. Officials indicated, however, that sanctions would be imposed against the company if the findings established a violation of President Reagan's ban on sales of U.S.-licensed pipeline technology to the Soviet Union that has led to U.S. actions against French, British and Italian firms.
The case, which was brought to light following a recent report in Nihon Keizai Shimbun, a leading economic daily, is the latest in a series of events that has churned up strong emotions in business and government circles here over what the Japanese interpret as heavy-handed efforts by the Reagan administration to impose its hardline Soviet policies on Tokyo.
In June, Washington enforced delays in the $220 million Japanese-Soviet Sakhalin oil and natural gas project by prohibiting Japan from using U.S. exploration technology, although industry sources here say that the project is going forward with the help of Soviet-held American know-how. Earlier, American trade officials tried, unsuccessfully, to block the shipment to the Soviet Union of large numbers of pipe-laying tractors produced by Komatsu Ltd. after Caterpillar Tractor was barred from a similar deal late last year.
Like its European counterparts, Tokyo does not, in principle, recognize the legality of Reagan administration pipeline sanctions. The Japanese have avoided making an issue of their dissatisfaction, however, because, in practice, the measures have done little to damage Japan's expanding Soviet trade and the country has a comparatively small stake in the areas covered by the ban.
An open confrontation, knowledgeable observers here say, holds few advantages for Tokyo because it might risk further unsettling Japan's already tense trade and economic ties with the United States. Senior Japanese officials assert, however, that Washington's tough stand and heated European resistance have made it increasingly difficult to pacify politically powerful business interests here favoring improved -- and more profitable -- Soviet relations.
Should the Reagan administration move against Japan Steel Works, these senior officials suggest, Tokyo may find itself forced, unwillingly, into a more critical public posture.
At the moment, however, officials at the Japanese company assert that the pipeline valves shipped to the Soviet Union in August were made purely on the basis of in-house technology. A spokesman, who did not want to be identified, acknowledged that the company entered into a licensing agreement with Grove Valve and Regulator in 1970. He said Japan Steel Works wanted to end the contract three years ago because, by then, the company's know-how had outstripped that of its American counterpart.
Instead, the Japanese renewed the agreement, this time for a shorter five-year period, in part because Grove officials complained of coldheartedness on the part of its Japanese licensee. Primarily, however, Japan Steel Works kept the relationship alive out of consideration for its customers who had purchased Grove products in the past and might require new components or servicing from the U.S. firm, the company spokesman said.
"In principle, though, our company now makes products that are higher in quality and cheaper," he said, "and, recently, there has been no demand in Japan for Grove products."
Japan Steel Works turns out a wide range of valves for industrial use, including a limited number under the existing licensing contract with Grove. But the fine points of technology transfer are spelled out in the contract, the spokesman said, "and we are absolutely sure that no Grove technology was used in any exports to the Soviet Union." Japan Steel Works has been exporting valves to the Soviet Union since the early 1970s.
Reflecting Tokyo's low-keyed public approach, a senior official at the Ministry of International Trade and Industry, which has completed a review of the case, said the decision to impose trade sanctions against the company is something that "depends, of course, on the interpretation of American law by U.S. officials. But it is hard to imagine that the sale could be found [to violate U.S.] sanction."