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U.S., Japan deadlocked on car dispute

Declaring that they are virtually deadlocked, negotiators for Japan and the United States said Saturday that their top trade officials had agreed to fly to Geneva on Monday to try to resolve their differences on automotive trade in the last 48 hours before sanctions go into effect on Japanese luxury cars.

The two officials, Mickey Kantor, the U.S. trade representative, and Ryutaro Hashimoto, Japan's minister of international trade and industry, will try to bridge what both sides say is an enormous gulf on how Japan should organize its economy and how its businesses should interact with foreign suppliers.

However, neither side expressed much optimism that the surprise meeting between the two longtime sparring partners would come in time to avert the 100 percent tariffs on 13 Japanese car models. The sanctions, which would be the largest trade retaliations in U.S. history, go into effect at midnight on Wednesday.

As described by U.S. and Japanese officials, the negotiations have stalled on three major issues: Getting far more Japanese car dealers to handle American models, breaking up a virtual cartel in the business of replacing parts on Japanese cars and, most important, forcing Japanese automakers to buy far more American components when they build cars _ in America and in Japan.

"The situation is very difficult, but it is not yet hopeless," Japan's lead negotiator, Yoshihiro Sakamoto, said at the Japanese mission in Geneva, which has been converted into a temporary headquarters for the scores of Japanese bureaucrats, experts and industry officials who have descended on this city.

In an hourlong talk, Sakamoto said Japan was committed to deregulating its economy and weakening the hold of the keiretsu, the families of interlinked companies that keep outsiders from obtaining some of the country's most lucrative contracts. But he suggested that the changes would happen at Tokyo's own pace _ and not under pressure or threats from the United States.

Sakamoto, who is the highest-ranking civil servant in Japan's trade ministry and one of the country's most powerful bureaucrats, also said that if the U.S. sanctions hurt small- and medium-sized Japanese businesses, the Japanese government would try to help them out, perhaps with some form of subsidies.

"Whatever the cause of trouble _ a major earthquake or political action by another government _ it is part of the Japanese government's role to provide assistance to medium- and small-sized companies that are hurt," Sakamoto said. But he said he did not expect that help to extend to the five biggest Japanese automakers, even if some of them _ including Mazda and Nissan _ are under extraordinary financial stress.

Sakamoto's comments came after a brief negotiating session with his American counterparts, the shortest since the two sides began talking Thursday. Asked whether he agreed with Sakamoto's pessimistic assessment of the talks, Jeffrey Garten, U.S. undersecretary of commerce for international trade, said, "We are wide apart on all the big issues, but we're certainly not giving up."

Ordinarily, Hashimoto and Kantor, two outspoken and combative trade ministers, would not fly to Geneva to meet unless a deal was pre-cooked and ready for public announcement. But both sides went to great pains Saturday to suggest that an agreement had not been reached.

Certainly there will be enormous pressure on Kantor and Hashimoto to reach a settlement. But the session seemed intended primarily for domestic consumption in both capitals.

Underlying the auto dispute is the large U.S. trade deficit with Japan. In 1994, it was $65.9-billion, of which 56 percent, or $36.7-billion, was in automotive trade, according to U.S. Commerce Department data.

Of that $36.7-billion trade gap, $12.8-billion was in auto parts and $23.9-billion was in vehicles.