The Reagan administration is expected to face tough resistance from Japan and from some entrenched U.S. interests if it hopes to succeed in forcing Japan to end beef and citrus import controls by April 1988 U.S. and Japanese officials said. Agriculture Secretary Richard Lyng and Trade Representative Clayton Yeutter took a hardline stance on beef and citrus in talks here last week insisting that the quotas be abandoned by April 1988. But that stance will be difficult to maintain because Japan will resist the pressure fiercely and because some U.S. suppliers of those commodities have an interest in maintaining the quotas U.S. and Japanese officials tolds. Twice in the past the United States has negotiated with Japan on beef and citrus import quotas -- during the Tokyo round of multilateral trade negotiations in 1978 and in bilateral talks in 1984. Each time the U.S. demanded an end to the quotas at the outset but ultimately accepted substantial increases instead. The current agreement calls for an increase in high quality beef imports to 58400 tonnes in fiscal 1987 oranges to 126000 tonnes and orange juice to 8500 tonnes. Lyng has said repeatedly that this time the United States will not settle for simple increases in the quotas. Japan has been given plenty of time to reform its agricultural support system and the quotas must be scrapped Lyng said. Japanese officials want to begin informal talks on beef and citrus in August or September in Hawaii sources said. If the U.S. intends to press its tough stance and Japan as expected rejects the demands the issue may then be put to the General Agreement on Tariffs and Trade for settlement which would mean prolonging the friction beyond the April 1988 deadline set by the U.S. officials said. In interviews here Japanese officials insist that on beef they will not liberalize imports regardless of the U.S. pressure because the Japanese beef industry is not competitive and would be damaged by freer trade. Most Japanese beef production still tends to be on small farms which Japanese officials said must be protected from cheap imports by use of the quota system. Furthermore while the U.S. National Cattlemens Association is strongly supporting the tough administration position some U.S. meat exporters and packers are ambivalent. This is because to some U.S. exporters and packers beef exports to Japan under the quota system are a steady reliable business managed by a quasi-government Japan Livestock Industry Promotion Corporation. Under quotas the U.S. share of Japans beef market has expanded at the expense of Australia. In the absence of quotas some U.S. suppliers are concerned the U.S. share might decline and exporting to Japan would become a riskier business meat industry sources said. Major U.S meat industry leaders will meet in Washington next week including cattlemen processors and exporters in an effort to reach an industry-wide consensus toward Japan. The citrus industry also appears split on the quota issue. Californias Sunkist the largest U.S. supplier of oranges to Japan has expressed reservations about eliminating quotas. A representative of Sunkist said the cooperative is concerned that in the absence of quotas lower quality oranges from Israel and South Africa might be competitive in Japan. Ironically some Japanese officials hinted that fresh oranges may be a product on which imports could be freed with a minimum of impact on Japanese mandarin orange production. This is because U.S. oranges do not directly compete with smaller Japanese mandarins officials said. But Japan wants to maintain quotas on orange juice because it fears imported juice tastes better and would displace Japanese mandarin orange juice they said. One scenario mentioned by both U.S. and Japanese officials is that Tokyo may try to blunt the tough administration stance by offering to scrap the quota on fresh oranges in return for U.S. acceptance of increases in beef and juice quotas. Lyng has acknowledged that liberalization of beef and citrus imports is a difficult objective but he insisted during the week-long tour here that it is a high priority on the U.S./Japan agriculture agenda-- more important than the rice issue which received most of the attention. Asked about the ambivalence of some in U.S. agribusiness Lyng noted some interests on both the U.S. and Japanese side have benefited from quotas but this will not stop the administration from pressing for liberalization. And Lyng said the administration believes it can marshall more support for eliminating the quotas now than ever before because of concern about Japans rising trade surplus. Were coming at this one (beef and citrus negotiation) with a much stronger view coming out of Washington. The times have changed. The trade balance is much worse Lyng said.
U.S. BEEF, CITRUS TALKS WITH JAPAN SEEN TOUGH