US, JAPAN IRONING OUT LITTLE SNAGS IN AUTO PACT KANTOR STEPS IN TO FINALIZE WORDING OF DEAL

US, JAPAN IRONING OUT LITTLE SNAGS IN AUTO PACT KANTOR STEPS IN TO FINALIZE WORDING OF DEAL

U.S. officials believe they are close to settling some nagging disagreements with Japan that have held up for a month the signing of a landmark auto trade pact that averted an unprecedented confrontation between the two economic competitors.

A number of smoldering disputes over the wording of the agreement finally required the involvement of U.S. Trade Representative, Mickey Kantor, who was expected to settle the issue in the next few days with his Japanese counterpart, Ryutaro Hashimoto, these officials said Friday.But Mr. Hashimoto may be out of a job when the Japanese Cabinet is shuffled later this week, adding some uncertainty to this next step.

A senior U.S. official downplayed the dispute, in which he said Japanese bureaucrats were refusing to accept methods for collecting data on the auto parts market that they agreed to in principle when the auto pact was announced June 28.

Japanese officials retorted that the United States is seeking more than was committed to at that time in an effort to distort the data against Japanese companies.

The U.S. official said it often takes a month or more to nail down the final version of trade agreements reached in principle, and that the auto pact had fit this pattern.

Although the dispute could be resolved as soon as this weekend, according to a senior U.S. trade official, it did force Mr. Kantor's office to abandon

plans for a White House signing ceremony Tuesday that was to have been presided over by Vice President Al Gore.

The ceremony would have been a chance to show the depth of support for the agreement among auto companies and union officials, and counter the prevalent view in the United States that the Clinton administration caved to Japanese demands.

The White House was counting on the auto agreement's being a big political boost for President Clinton in auto manufacturing states such as Michigan, at least neutralizing the bad feeling among blue-collar workers there about Mr. Clinton's other big trade victory, the North American Free Trade Agreement.

But Mr. Kantor was booed by Michigan workers when he visited in early July, and public opinion about the auto pact has not warmed since then.

This was not what administration officials expected when they went to the brink of imposing $5.9 billion a year in trade sanctions on Japan in the auto dispute. The threat - which would have effectively blocked all imports of Japanese-made luxury cars - at first earned Mr. Clinton some credit from those who believed the United States had never before been credible in its trade threats to Japan.

After months of contentious negotiations, the two governments announced a new agreement on June 28 to promote sales of U.S.-made autos and auto parts. Aside from new promises by Japanese automakers to buy more American-made parts, the government of Japan agreed to deregulate its auto repair market and monitor the proportion of American-made parts in autos made at Japanese-owned ''transplant" factories in the United States.

It is over this latter point - monitoring - that the dispute has arisen, and officials from both sides say this is holding up the auto agreement.

The dispute centers on a piece of legislation that Japanese government and industry have long been unhappy about - the American Auto Labeling Act. The act uses some unusually strict rules to decide what can be counted as ''American" content in a car.

Among other things, it excludes all labor costs. This is different from the standard used for labeling other products in the United States, and throughout the world, where factory labor costs are included in making this calculation.

The result, complain Japanese officials, is that many Japanese-made components imported into the United States and further transformed for use at Japanese-owned transplant factories are unfairly considered 100 percent Japanese-made.

U.S. officials claim the Labeling Act's count of American content in Japanese cars was one of many "indicators" or "data points" agreed to by the two governments as a kind of neutral measurement of the proportion of U.S. parts in Japanese-made cars. Japanese officials also agreed to use the act as one criterion for measuring progress under the agreement, a less neutral barometer that will actually be used to decide if Japan is complying with the trade pact, according to a U.S. industry official.

Japanese officials claim they never agreed to use the act in either of these two respects. Instead, they are emphasizing another criterion for measuring progress, the special local content rules for automobile under the North American Free Trade Agreement. These rules - used to establish if a car assembled in North America can be shipped elsewhere on the continent under Nafta's reduced duty rates - are more liberal than the Labeling Act and include most factory labor costs.