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U.S., Japan Set Deadline on Disputes

Trade: They agree to settle differences regarding semiconductors, insurance by the end of July.


LYONS, France — Working against a fast-approaching deadline, President Clinton and Japanese Prime Minister Ryutaro Hashimoto agreed Thursday to try to resolve two of their nations' most intractable trade disputes--semiconductors and insurance--by the end of July, senior aides said.

The agreement came as Clinton "expressed his concern about the fact there had been very little progress on the issues," said Laura D'Andrea Tyson, chief of Clinton's National Economic Council.

The two sides have repeatedly expressed the need to reach agreement and have set deadlines only to ignore them. But the history of U.S.-Japanese trade disputes suggests that the political will to eventually solve disputes materializes only at the last moment, after intensive negotiations--and after threats that sanctions will result if an accord is not reached.

Asked what the United States would do if an agreement is not reached by July 31, White House press secretary Mike McCurry, using diplomatic language indicating a willingness to increase pressure, said: "We take our U.S. trade laws seriously, and we have to enforce our trade laws."

Clinton and Hashimoto met for twice as long as planned on the eve of the annual summit of the seven leading industrial democracies.

As the Group of Seven leaders gathered, there were suggestions--after senior U.S. aides met with their counterparts--that summit leaders also may be near agreement on two of the potentially most contentious economic-related issues:

* French President Jacques Chirac has taken a lead, with the United States, to push for greater efforts to help the debt-hammered, least-developed nations--most of which are in Africa.

* A plan, resisted until Thursday by Japan and Germany, to sell some International Monetary Fund gold to boost the agency's aid capacity. Japanese Finance Minister Wataru Kubo indicated in a meeting with U.S. Treasury Secretary Robert E. Rubin that Japan would accept the proposal, leaving only Germany opposing it, administration aides said.

Before Clinton and Hashimoto met, Rubin and Kubo were said by an administration official to have made "modest progress" in resolving trade issues. After the meeting, Tyson said the president and prime minister's commitment to reaching agreement by July 31 is "a very significant sign of their seriousness of purpose."

The insurance issue was originally part of the U.S.-Japan "framework" agreement reached three years ago, in which the two nations set up a design for approaching some of their most contentious trade disputes. A 1994 pact set ground rules for deregulating Japan's insurance market; Tokyo said it would liberalize operations that were still closed to foreign companies--life- and nonlife coverages--before opening a third sector, for illnesses and accidents. The United States says insufficient progress has been made here.

The semiconductor agreement expires July 31. A five-year pact, under which Japan made a commitment to import 20% of the computer chips its industries use, was reached in 1986 and renewed five years ago. The most recent figures indicate that chip imports have surged beyond the target level, to 30%.

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