Clinton Weighs Japan Trade Sanctions -- Higher Cellular-Telephone Tariffs Could Be The First Step

WASHINGTON - President Clinton said today he's reviewing a range of possible retaliatory sanctions against Japan in the aftermath of last week's collapse of trade talks. "There are a number of options open to us," he said.

The White House said the first blow could come as early as tomorrow with the beginning of proceedings leading to increased tariffs on Japanese-built cellular phones.

Clinton told a news conference that he is reviewing possible steps to take - beyond the cellular-phone action - in an attempt to increase pressure on Tokyo.

"I'm going to make a decision within a few days. We need to clarify what America's approach is going to be," he said.

The president suggested that the cellular-phone step might have happened anyway, even if trade talks hadn't broken down, since it was part of a long process with a deadline that happens to fall tomorrow.

But, Clinton said, "It is a good illustration of the problem we face in entering Japanese markets."

The cellular-phone dispute stems from complaints by Motorola Co. on its frustrations in selling cellular phones in Japan.

Mike Houghton, a spokesman for the Cellular Telecommunications Industry Association in Washington, D.C., said there could be a benefit to the U.S. cell-phone industry if higher tariffs were put on Japanese imports. However, he cautioned that the impact could be small because the bulk of phones sold in the U.S. are also made here, mostly by Motorola.

"Motorola is far and away the largest manufacturer of phones sold in the U.S.," said Robert Ratliffe, McCaw's vice president of corporate affairs. Some 81 percent of McCaw's phones come from Motorola, with the balance from AT&T, Finland's Technophone, and Sweden's Ericsson. Some 5 percent come from NEC, a Japanese company that makes the phones in Mexico and Portland.

Lisa Bowersock, a spokeswoman for U S West Cellular, says the Bellevue-based subsidiary of Denver's U S West Inc. doesn't sell any Japanese-made cellular phones.

"Any sanctions on Japanese companies would have minimal impact on U S West Cellular," she said.

The company gets its phones from Motorola and Nokia, a Finnish company that manufacturers them in Texas.

Clinton administration officials also acknowledged that a move raising tariffs on Japanese-made cellular phones would be a relatively minor step.

Clinton clearly hinted that even stronger trade retaliation was in the offing, complaining that Japan had been resistant to all efforts to reduce its trade surplus with the United States.

"I think it's an unsustainable policy," he said.

Asked if sanctions might spark a trade war, Clinton said: "It could be. But I think they would have to think long and hard about it."

He noted that Japan has extensive investments in the United States that could be hurt in any trade battle.

Administration officials, speaking on the condition of anonymity, said Clinton was considering issuing an executive order renewing a powerful but dormant trade-law provision called Super 301.

Under this law - used in the early days of the Bush administration but not since - the United States can take a wide range of retaliatory steps against countries that engage in "unfair" trade practices.

The law was designed with Japan as its main target, and Japanese officials have long resented its existence.

Goods sold here and made in Japan will be affected if the dollar continues to fall against the yen as it did today.

Additionaly, said Scott Wells, a salesman for Bellevue's Video Only, if sanctions were to spread to other electronic products, "it would definitely negatively impact the industry," already squeezed by tight profit margins and increasing competition, particularly in the Seattle area.

Overall Washington state has much at stake when it comes to this country's trade relations with Japan.

Not only does Boeing sell jets to Japan Airlines, All Nippon Airways and Japan Air Systems, Japanese aerospace companies help build fuselage, wing and other parts for several Boeing jets, including the new 777 widebody that will roll out of the Everett factory in April.

Apples are scheduled to be exported to Japan for the first time next year. Growers from the state have spent hundreds of thousands of dollars trying to satisfy the many requirements on imported apples set by the Japanese agricultural ministry.

Clinton's critics say it's wrong to retaliate against protectionist Japan, because protectionism is its own punishment. Keep forcing your consumers to buy $3 apples, this logic goes, and eventually your economy will fall behind those of other countries that buy their apples - and everything else - at cheaper world prices.

Seattle Times business reporters Scott Williams and Steve Dunphy contributed to this report.