TRADE ISSUES STRAINING EC'S PATIENCE WITH JAPAN
  Member states of the European
  Community are starting to run out of patience with Japan which
  they believe has repeatedly promised major initiatives to open
  its market to imports, but as often made only minor moves.
      Diplomatic sources here said several recent actions by EC
  countries bear witness to a new disillusionment with the
  willingness, or at least the ability, of the Japanese
  government to reduce its massive trade surplus with the EC.
      However, they said an all-out trade war may be far off, as
  EC states know they would suffer almost as much as Japan.
      Senior EC diplomats gave a generally favourable reaction to
  an EC executive commission proposal under which the EC could
  raise tariffs on a range of Japanese products if the U.S.
  Carries out a threat to make a similar move on April 17.
      The EC tariffs, which would involve renouncing obligations
  entered into with the world trade body GATT, would be designed
  to stop a diversion of exports to the EC market from that of
  the U.S.
      The diplomats were meeting as Tokyo announced that the EC's
  trade deficit with Japan reached a record 2.13 billion dlrs in
  March, up from 1.94 billion in February.
      In 1986, Japanese exports to the EC totalled 30.67 billion
  dlrs, up 4.5 pct from 1985, while EC exports to Japan fell one
  pct to 12.43 billion dlrs.
      In Paris, trade minister Michel Noir said France has
  decided to give Japan a taste of its own medicine.
      Burgeoning imports of microwave ovens and of frozen
  Coquilles St Jacques will be restricted by a strict application
  of French quality standards -- something EC states say often
  happens to their own exports entering Japan.
      Britain has threatened to withdraw the licences of Japanese
  banks and insurance companies to operate in the City of London,
  because the British Cable and Wireless company lost out in
  competition for a Japanese telecommucations contract.
      However, British officials in London have said that the
  government may have gone too far in implying that it would take
  immediate drastic action unless the contract was reopened.
      By contrast, West Germany, with the EC's most successful
  economy, has never threatened Tokyo with sanctions, preferring
  to rely on firm diplomacy and encouragement of its own
  industries to surmount obstacles to export to Japan.
      The EC Commission itself has switched its tactics in recent
  years, substituting general calls for action by Japan to open
  its market with specific demands for moves in key areas.
      At present, it is, for instance, pressuring Japan to end
  allegedly discriminatory taxation of imported wines and
  spirits, to ensure EC companies have a chance to win contracts
  for the building of a new international airport, and to
  simplify certification and safety checks on imported cars.
      EC officials say these tactics yield some benefits, but
  often the Japanese announce modifications of their non-tariff
  barriers which open the door to imports by only a token amount.
      They stress, however, that any action must be taken by the
  EC as a whole to stop beggar-my-neighbour action.
      One of the problems Britain could face if it were to
  withdraw licences for Japanese banks would be that the bankers
  would be welcomed with open arms in Frankfurt or Amsterdam,
  they point out.
  

