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JAPAN WILL LOWER EXPORT CEILING TO EASE TRADE FRICTION WITH U.S.

Japan announced it will reduce its voluntary limit on car exports to the United States to ease mounting trade friction and head off growing American calls for protectionism.

International Trade and Industry Minister Kozo Watanabe said Japan will slash the quota from 2.3 million vehicles a year to its No. 1 trading partner to 1.65 million for the fiscal year starting April 1 in the hope of bolstering the American auto industry's sluggish performance.However, the new policy is not as sacrificial as it sounds because the United States will import only about 1.73 million vehicles in the fiscal year ending March 31, down from 1.85 million a year earlier.

And because many Japanese firms make cars in the United States, it has been several years since imports were as high as 2.3 million.

"My philosophy is that Japan-U.S. relations are quite important," Watanabe said. "In my view, economic policy must be developed to improve Japan-U.S. relations."

American carmakers were less impressed with the Japanese move.

Ford Motor Co. Chairman Harold A. Poling said: "This won't do a thing to help the trade balance. All that has happened is that the Japanese government has proposed a voluntary level for 1992 at about the same volume their automakers imported into the United States from Japan in 1991. So, where is the reduction?"

The Chrysler Corp. called the decision "a small step in the right direction. The sales of Japanese imports have been running at a l.65 million-a-year rate, anyway. They've simply set the new limit at their current sales level. This action, therefore, does not represent in any way a step back or concessions from Japan."

Japanese executives of Toyota and Nissan, the country's main auto manufacturers, reluctantly accepted the government decision.

Shoichiro Toyoda, president of Toyota Motor Corp., Japan's No. 1 automaker, said, "We believe that free trade is ultimately the best direction, but we respect the government's decision and we will abide by it."

Yutaka Kume, president of Nissan Motor Co., Japan's No. 2 automaker, said that "while there is concern that the government's decision may lead to a strengthening of managed trade, I believe it is based on a comprehensive assessment of the present state of strained relations between Japan and the U.S."

The export ceiling was imposed in 1981 under pressure from Washington and the U.S. auto industry, but Washington stopped asking for continued restraints in 1985.

Watanabe said it may be difficult for the new curb to satisfy everyone in the United States and added, "I became MITI chief at the worst time."

He said MITI has yet to decide upon company-by-company export quotas.

Auto trade has become a festering sore in bilateral ties since President Bush brought a trade mission to Tokyo in January, including the leaders of the "Big Three" automakers - General Motors, Ford and Chrysler.

Bush and Prime Minister Kiichi Miyazawa agreed to a non-binding accord under which Japanese carmakers would double procurement of U.S.-made auto parts to $19 billion annually by fiscal 1994 and boost sales of American cars by 20,000 vehicles per year.

The U.S. trade deficit with Japan hit $38.45 billion in 1991, three-fourths of it due to trade in cars and parts.