US-JAPANESE LUMBER TALKS END WITHOUT AN AGREEMENT

US-JAPANESE LUMBER TALKS END WITHOUT AN AGREEMENT

Trade negotiators ended talks Friday without reaching an agreement on U.S. demands that Japan remove restrictions on imports of wood products but another round of discussions is planned.

Lumber products trade is the only unresolved issue among three areas in which Washington has been seeking to remove trade barriers under a section of U.S. trade law known as "Super 301.""There are still significant differences in our positions," a U.S. official in Tokyo told reporters.

"We have made substantial progress on many points, but some issues remain to be discussed further," said a Japanese Foreign Ministry official, speaking on condition of anonymity. "We have concluded our talks at this round after agreeing to hold another round of talks in the near future."

The U.S. official, who also spoke on condition he not be named, said U.S. negotiators felt they could reach an agreement before June 16, when the U.S. administration is required legally under the Super 301 law to decide whether or not to take retaliatory action for foreign trade practices it says are unfair.

Last year the Bush administration designated Japanese trade in wood products, satellites and supercomputers as areas in which U.S. products face unfair trade practices under the Super 301 clause.

The two governments recently reached agreements on greater access to Japan's satellite and supercomputer markets, but talks on lumber trade, which began April 9, faced mounting disagreement mainly because of Japan's complicated housing and construction regulations, the Japanese official said.

Meanwhile, in Washington, Sen. John Danforth, R-Mo., has asked President George Bush to name Japan a priority country again this year under the Super 301 law, the senator's office said last week.

Sen. Danforth, a member of the Senate Finance Committee, said in a letter to Mr. Bush that failure to designate Japan this year as a priority country under the super 301 provision of the 1988 trade act would cause an extremely adverse reaction from Congress. The 1989 designation clearly awakened Japan to the danger of continued stonewalling on trade issues, the senator said.

Last year, the United States exported $2.8 billion in wood products to Japan, mostly unfinished logs. But more than 70 percent of the Japanese purchases were of non-processed wood materials, such as logs and chips, while just under 30 percent were of finished materials, such as plywood sheets and paneling.

The industry is striving to boost the percentage of finished goods

because they account for extra profit. Barry M. Cullen, president of the National Forest Products Association, said the package of U.S. proposals under negotiation in the current talks, if adopted, would raise current sales by $2 billion as well as create between 17,000 and 20,000 new jobs for Americans.

U.S. industry and government officials say a Japanese law banning the construction of three-story wooden apartments unfairly limits wood imports.

They also say Tokyo's product specifications and tariffs for lumber unfairly discriminate against imports of high-value finished and semifinished wood products.

By importing mainly raw timber, they say, Japan is protecting its own uncompetitive, traditional timber-processing industry.

Japanese officials, however, argue that such restrictions are necessary safety precautions in their earthquake-prone nation, and thus cannot be eased unconditionally.

While traditional Japanese architecture is based on wooden construction, modern Japan has strict building codes to minimize the risk of damage and fire

from earthquakes.

Officials from both sides said progress had been made in all areas of discussion, but declined to explain remaining disagreements.

The U.S. official said he expected the talks to resume very soon, but did not say exactly when or where the next round of negotiations would take place.