Bush, Miyazawa Seek to Avoid A Tokyo Replay

ELECTION season in both Japan and the United States makes this week's summit between the two giant economic rivals an exercise in super-cautious diplomacy.

The Tokyo summit in January between President Bush and Prime Minister Kiichi Miyazawa was a political disaster. Mr. Bush turned it into a US trade mission that flopped, and Japanese leaders compounded matters later by issuing remarks critical of American workers.

This time the two leaders will meet at the secluded Camp David presidential retreat July 1-2. To prevent either leader from receiving a political black eye before elections, disputes over trade will be played down, Japanese officials say.

Mr. Miyazawa's Liberal Democratic Party faces an uphill fight in a July 26 vote for half of parliament's upper house seats. The LDP does not want Bush to upset key voters by possibly threatening trade sanctions over such issues as Japan's restricted markets in computer chips or rice.

Instead, Japanese officials hope for a gloss of friendly bilateral summitry just before the larger summit in Munich of the seven major industrial nations July 6-8.

A cordial US-Japan summit would help Miyazawa and the LDP win back its majority in the upper house, which it lost dramatically in 1989, and perhaps keep Bush unscathed by a potentially damaging campaign issue.

Both the Japanese government and big business have tried to curtail a growing anti-Japan sentiment in the US, known as "revisionism," that contends Japan must be treated uniquely as a trade partner because of its mercantile form of capitalism and virtual one-party democracy that differ from the West.

When Vice President Dan Quayle visited Tokyo in May, Miyazawa praised him for his courage in "bashing the Japan-bashers and revising the revisionists."

Officials in Tokyo seem relieved that the US election campaign has not focused yet on Japan's rising trade surplus and its alleged "unfair" business practices.

Still, they worry that the potential presidential candidacy of Ross Perot, who is perceived here as a hard-liner against Japan, might spark a protectionist mood in Congress.

To help Bush win in the November election, which is a not-so-secret goal of Japanese leaders, Miyazawa will present a plan that appears to meet a Bush request for Japan to boost its sagging domestic economy with a pump-priming boost in the government budget. The LDP gave sketchy details of the plan on Saturday, saying it will spend $47 billion to $55 billion. Japan, the locomotive

The US has requested such spending for two reasons. One is to make Japan the economic locomotive for the world economy by having it reach a targeted 3.5 percent growth this year. The other is to increase imports into Japan and reduce Japan's looming trade surplus, which was a record $113.4 billion in the fiscal year that ended in March.

"The Japanese government, we, and other governments with rising trade deficits with Japan recognize the need of the strongest economies - and we and Japan are the strongest - to provide stimulus to the world," Michael Armacost, US ambassador to Japan, told reporters.

But the LDP's plan faces opposition from the powerful Ministry of Finance. And it may not even be debated in parliament until this fall, by which time the Japanese economy may be reviving.

Miyazawa also plans to highlight a new law, rammed through parliament by the LDP despite forceful opposition, that allows Japanese troops to serve as United Nations peacekeepers. Japan hopes to send 400 to 700 troops to Cambodia by the end of the year, but only if a cease-fire is assured. The US has been the only country to praise the new law. Quiet arm-twisting

Despite such summit offerings, Miyazawa could face quiet arm-twisting by Bush on a number of trade issues.

In March, the US cited Japan as the country with the most trade barriers. And Congress is moving ahead on a bill to renew the so-called "super 301" rule that would penalize countries with closed markets.

In May, the US challenged Japan for not making progress on an agreement to provide a 20 percent market share for foreign semiconductors by 1993. This issue, says Deputy US Trade Representative Michael Maskow, "could be the most contentious issue on our bilateral agenda this year." The two sides vow new efforts to raise the share from its present level of about 15 percent.

US efforts to end cartels and price-fixing in Japan has recently hit tough resistance. Japan's Fair Trade Commission (FTC) rejected US claims in June that close ties between large groups of Japanese companies are anti-competitive and harm foreign firms. And the FTC chose not to prosecute 66 construction firms found rigging bids on government projects.

Japan also defied a US position by keeping price supports for its rice farmers unchanged this year. In an unusual move, the Japanese government cited the US as the world's foremost unfair trader on June 9, claiming it has begun to depart from the multilateral rules of General Agreement on Tariffs and Trade (GATT).

"For America to be told the truth is probably not pleasant," said Kozo Watanabe, minister of international trade and industry. Ambassador Armacost responded by claiming that many US protectionist practices are needed because many GATT standards are deficient.