Tapping CIA in Trade Spying Irks a Key Security Ally, Japan

WHENEVER the United States and Japan get into an argument over their unbalanced trade relationship, officials on both sides are quick to insist that commercial acrimony will not hurt the two countries' security alliance.

Now comes a detailed allegation that the US has been using part of its defense establishment - its intelligence services - in order to gain advantage over Japan during trade negotiations.

Suddenly it seems that the realms of commerce and security are not so separate.

Neither government has confirmed a report published Sunday in The New York Times asserting that US intelligence agents spied on Japanese negotiators during trade talks this summer, but Japanese officials say privately that the Americans are not playing fair if the allegations are true.

"If this is going on," says a government official involved in intelligence work, "we have to devise some way to protect against this type of unfriendly activity."

This disgruntlement highlights a downside of President Clinton's policy of encouraging the Central Intelligence Agency (CIA) to engage in economic espionage: It can make old friends a lot less friendly.

Mr. Clinton has argued that the spy services need to find new things to do now that their former foes in the Communist world no longer pose such a threat.

In February, France expelled four CIA officers for engaging in economic espionage.

In Japan's case, the spying allegations crop up during an already uncomfortable period. Not only is the US-Japan trade relationship perpetually discordant, but lately the security treaty between the two countries has come under unusual and uncomfortable scrutiny.

Since 1960, the US and Japan have maintained a mutual defense pact where the US protects Japan in exchange for the right to maintain forces here as part of its presence in the Pacific region. But more and more, Japanese leaders are openly discussing the need to revise parts of the treaty, and to scale back the US military presence here, especially on the southern Japanese island of Okinawa. The island hosts 29,000 of the 45,000 US troops in Japan.

On Nov. 7, a Japanese court will try three US servicemen charged with raping a Okinawan schoolgirl last month. The incident has angered Okinawans, for whom it has become a symbol of the onerous US presence, and to a lesser extent people in the rest of Japan.

In response to the article on industrial spying, the Japanese government said yesterday that it would ask Washington for an explanation. "In order to maintain trust ... it is only natural for us to ask the US government to clarify the report," says Chief Cabinet Secretary Koken Nosaka.

There is some irony in the Japanese protestations, since American analysts have said that some outwardly banal bureaucracies in Tokyo, such as the Japan External Trade Organization, are in fact sophisticated outposts of economic espionage. JETRO has offices worldwide, and is said to scout out markets and technologies of interest to Japanese companies.

ONE retired Japanese businessman with long experience in the US says the allegation that the CIA has eavesdropped on Japanese negotiators sounds "uncommon but not extraordinary."

But the businessman, who requested anonymity, says the timing of the revelations was awkward at best. "We already have the Okinawa situation," he observes, "and popular sentiment [in response to the spying allegations] could have unintended consequences." Echoing the comments of several Japanese officials, he says the situation could become more serious if it appears that US agents broke laws in carrying out espionage.

One official at the Ministry of International Trade and Industry who participated in this summer's negotiations observes that the CIA's assistance does not appear to have helped the American side. The US was attempting to pressure Tokyo into accepting quotas or benchmarks to measure the degree of openness of certain Japanese markets, an effort that independent observers said failed. He says trade officials already conduct themselves as if the other side were spying by guarding sensitive documents and not discussing matters of substance on unsecured telephones.

Japan's own intelligence capabilities are spread among several bureaucracies and are generally considered understaffed, inadequately funded, and overly reliant on help from outsiders. "Although intelligence underpins a number of defense activities, currently it is the weakest element in Japan's defense structure," writes Lt. Gen. Atsumasa Yamamoto, of Japan's defense agency, in a recent report.

Japanese spies and intelligence analysts have so far focused on potentially threatening countries in the region, such as China, Russia, or North Korea. But as the trade official points out, it may be time to start watching the US.

Japan's spies have so far focused on China, North Korea, and Russia. It may now be time to start watching the US.