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Hosokawa tries to talk trade with U.S. while system comes apart


TOKYO -- Japan's Prime Minister Morihiro Hosokawa can look forward to his U.S. sojourn this week for at least one reason: He will be leaving Japan and its increasingly chaotic politics.

A country once known for stability has become a political circus. Within the past two weeks, the government has seen its political reform bill killed by coalition members and then revived by the opposition in a less vivid form that was even farther from what the initial supporters had wanted.

A critical tax bill suffered the same initial derailment, but today leader's of Mr. Hosokawa's ruling coalition announced settlement of the dispute. The tax measure is to be part of an economic stimulus plan that Mr. Hosokawa hopes to unveil before leaving for Washington on Thursday.

Officials declined to disclose details of the compromise on the plan to cut $55 billion in taxes before reporting to the prime ministers.

U.S. officials have called for a tax cut in Japan, believing consumers would use some of the windfall to buy foreign products, which could help trim Japan's huge trade surplus.

About the only truly cohesive plan for Japan's governance is being provided by the ever-expanding stream of U.S. trade negotiators coming through Tokyo. They want more spending by Japan and a weakening of the country's pivotal ministries.

Whether the Japanese are in any mood to listen to such ideas is uncertain. The confusion has placed Mr. Hosokawa in the same position as Russian President Boris N. Yeltsin, PLO Chairman Yasser Arafat and numerous other world leaders who have argued that the weakness of their standing should permit them latitude for their positions.

The U.S. trip will be Mr. Hosokawa's third since his surprise election last summer, but U.S. and Japanese officials have said jointly that this meeting will be the critical session for resolving difficult issues.

It is nothing new for negotiations to come down to the last moment, but a senior Japanese government official said Friday that the state of most of the current trade talks is "disastrous."

U.S. Trade Representative Mickey Kantor's arrival in Japan last week as a high-level emissary sent to break a deadlock received celebrity coverage. Television news stations showed a stern-looking Mr. Kantor at the airport, and photographs of him in serious discussions run in the newspapers. His every utterance has received scrutiny and commentary.

Whether all that will have an impact is questionable. The Japanese are strongly resisting the key U.S. demand, the imposition of numerical goals to measure progress in the opening of Japan's markets, and Mr. Kantor acknowledged Friday that Japan has not accepted that condition.

"We must have a prompt, substantial and continuous increase in access and sales of foreign competitive goods and services, and we must be able to measure the results," he said.

If those goals are not achieved, Mr. Kantor said, "we would have to look to other options," a comment Japanese commentators understood to mean more overt sanctions.

With only a week to go before the meeting between Hosokawa and Clinton, Mr. Kantor painted a bleak picture. "The economic leg of our . . . relationship is not strong," he said. "We need Japan to take its share of responsibility."

Reflecting a common analysis of prospects for the Washington meeting, the influential newspaper Asahi Shimbun presented three possible outcomes: a complete breakdown over numerical targets; a compromise based on vague statements of target recognition; and a shelving of contentious points along with a declaration on points of concurrence. Negotiations on encouraging direct U.S. investment in Japan, for instance, are going well.

U.S. officials frequently repeat, however, their unwillingness to accept what they contend would be a "cosmetic" or insubstantial agreement.

Progress in the talks often seems to be reflected in the relationship between the yen and the dollar. The Japanese currency has risen steadily in recent weeks, to 108 from 113 to the dollar, as prospects have faded for a successful conclusion of the trade talks and a pronounced lowering of the $57 billion U.S. trade deficit with Japan.

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