US taking wrong track on trade, says Sir Leon: Europe urges co-operation to open Japanese markets

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SIR LEON Brittan yesterday criticised American efforts to open Japan's markets, and suggested a joint initiative between the US, Japan and Europe instead.

The American approach of concentrating on increasing exports by quantifiable amounts in particular sectors was not working and could hurt European exports, Sir Leon warned. 'The US has not achieved its objectives,' he said.

'Our concern about the American approach has been that there is an element of managed trade,' Sir Leon said after trade talks between the US and Japan broke down. 'If you believe in a market economy, that causes real problems.'

Instead, the US, Europe and Japan should develop a trilateral means of co-operating over trade issues, he argued. 'It may be that the right course now is . . . for the Japanese, Europeans and the Americans collectively to get together. He suggested combining the US preference for targets with Europe's preference for measures designed to open markets.

Earlier, Sir Leon had discussed the idea with a group of US senators visiting the North Atlantic Assembly, Nato's parliamentary arm, in Brussels. It is believed Sir Leon has also spoken recently to Mickey Kantor, the US Trade Representative, and that the subject may have been raised.

Sir Leon was presenting a new initiative to enable European exporters to break into the Japanese market. In the first phase, this was likely to cover a range of sectors including medical equipment, machine tools, furniture and mechanical equipment. But whereas the US has concentrated on using its trade muscle to achieve calculated increases in exports within time limits, Europe prefers a softer strategy.

Europe's trade deficit with Japan last year was dollars 26bn ( pounds 17.7m), compared to America's deficit of dollars 59bn. The US has a small deficit with Western Europe of dollars 2bn, according to figures released yesterday in Washington, but this has slipped from a surplus in 1992.

The trade flows between the three regions account for a huge proportion of world trade. Evidence of a drift away from free trade principles has alarmed America's trade partners, and the current row between Japan and the US could have damaging side-effects for Europe.

Forthcoming trade negotiations between Europe and Japan may only damage relations, with Brussels keen to see concrete results from a trade-assessment mechanism set up to reverse the deficit. 'The trade imbalance between the European Union and Japan needs serious attention and is a problem,' said Sir Leon.