Financial Post, Weekly edition, Fri 16 Jun 95, page 1

U.S., Japan talk tough on auto trade at G-7 opener

Bud Jorgensen with files from Greg Ip, Reuter

U.S. President Bill Clinton and Japanese Prime Minister Tomiichi Murayama squared off in public yesterday over the auto trade dispute, both taking hardline positions at the opening of the G-7 summit.

Background discussions by officials from the two countries were equally bleak, suggesting that public statements by the two leaders do not mask efforts to reach a behind-the-scenes deal.

The top trade negotiators for the U.S., Japan and the European Community were all at the Halifax summit and were to gather at a reception organized by federal Trade Minister Roy MacLaren.

But officials from each of the national delegations insisted that auto trade talks would not be on the G-7 agenda.

Finance Minister Paul Martin told reporters that Canada supports the objective of greater penetration of the Japanese market but hinted that the U.S. might find itself isolated in a confrontation over auto trade.

''If that objective were ever gained as a result of numerical targets being established that would benefit one country to the exclusion of others, i.e., the U.S. excluding Canada, then obviously we would be affected,'' Martin said.

Clinton painted a rosy picture of U.S.-Japan relations after his meeting with Murayama but was blunt on the auto dispute.

''If a solution cannot be found by the [U.S.-imposed June 28] deadline, I will impose sanctions.''

Murayama held firm and said there would be public consultations on the issue.

U.S. Secretary of State Warrren Christopher later held out hope for a last-minute resolution of the problem.

''Many important trade agreements are reached at the 11th hour and let's hope this one will be as well,'' he told a media briefing.

In background sessions, Japanese officials linked the government's position to public opinion polls that show solid support for Murayama's tough stance with the U.S. over auto trade.

Clinton also has strong backing in the polls for his stand and the dispute could become an emotional campaign issue in both countries.

Upper House elections in Japan are to be held next month and the Murayama government is in a tough political fight to consolidate its position. Meanwhile, Clinton is nearing the end of his first term and next year is a presidential election year in the U.S.

The issue expected to dominate the G-7 discussions is reform of international financial institutions (IFIs) in order to provide a system for managing crises like the collapse last December of the value of the Mexican peso.

There is a general agreement that the IFIs need a better early warning system of potential problems and greater access to financing in order to deal with the problems.

But so far there seems to be little support for proposals to give more independent power to the International Monetary Fund and the World Bank.

However, there is some support for the Japanese position that the World Trade Organization should have more clout in resolving trade disputes.

The Bosnian conflict moved to the top of the political agenda last night as the G-7 appealed to all parties to declare an immediate moratorium on military operations to allow for political negotiations.

''We send out to all the parties a strong call for the greatest restraint,'' Prime Minister Jean Chretien said in a statement on behalf of the summit.

Chretien issued the statement after the opening dinner, where foreign ministers were unexpectedly called in to discuss the worsening situation in former Yugoslavia.

The summit leaders, who had not been expected to discuss Bosnia on the first day of the meeting, issued their urgent appeal as the Muslim-led Bosnian govenment was reported to have massed tens of thousands of troops north of Sarajevo for a possible bid to break the Bosnian Serb siege of the city.

	This information is provided by the Financial Post.
	Please send comments to: g8@utoronto.ca Revised: June 3, 1995

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