Japan moves to cut tariffs but fails to impress trade partners. US calls it `a good first step' and prods the nation to open its markets further

Japan's announcement last week that it will lower tariffs on more than 1,800 items as part of a program to ease access to its markets has turned out to be less dramatic than intended. The announced cuts are the first plan Japan has unveiled since it promised to improve market access to foreign products last April 9. Although these are the broadest tariff reductions Tokyo has made in more than a decade, foreign and Japanese officials don't expect them to have much effect on Japan's trade surplus.

Many observers see the move as another public relations exercise designed to show the world that Japan is taking the initiative to open its markets.

The list of products which will be incorporated in a broader ``action program'' sometime in July consists of two sections.

In the first category are 74 industrial and agricultural products, on which tariffs will be lowered an average 20 percent. This includes products such as automobile parts and manufacturing tools, and various agricultural goods and processed agricultural products such as boneless chicken and palm oil.

In addition, the government promises to lower tariffs on about 1,800 other industrial products and processed agricultural products, but with the provision that it may raise tariffs again in case of a sudden ``surge of some imports which could harm the local industry.''

Most tariff reductions will take place in early 1986.

The list does not include such items as chocolates and cheese, which are important to both the United States and Europe. But Japanese Prime Minister Yasuhiro Nakasone instructed his Cabinet to consider cutting tariffs on those products as well.

The Japanese government also said it is prepared to negotiate with other countries on the possibility of scrapping tariffs for another 50 items, including computers and other high-tech products even before the start of the new round.

Reaction to these Japanese initiatives has not exactly been enthusaistic.

US Ambassador Mike Mansfield said, ``This is a good first step in the right direction.'' But he called for Japan to open its markets further.

He said the Reagan administration has been trying to ``hold the line'' against the mounting protectionist mood in the US Congress but added that he was concerned that legislators might impose restrictions this year unless Japan makes good on its promise to open its markets.

Leaders of several European and Asian nations voiced dissatisfaction over the announced tariff cuts.

At the same time, not all Japanese were pleased either. An organization representing farmers said the move to cut tariffs on some agricultural products was regrettable and that this could ``have a grave effect on the future of Japanese agriculture.''

By lowering tariffs the Japanese government hopes for reciprocal action from other countries in a council session of the General Agreement on Tariffs and Trade (GATT) slated for mid-July.

Michihiko Kunihiro, director-general of the Economic Policy Bureau of the Foreign Ministry said Tuesday, ``We would very much like to see what we have decided today to take the lead in formulating policies of countries participating in the new round [of GATT talks].''

Little progress was made on other trade issues last week. US trade officials say many issues remain unresolved.

Acting US trade representative Michael B. Smith said a number of issues should be resolved ``as quickly as possible so as to permit us to get on with other business -- such as the joint work which we are doing for a new round of trade negotiations in the GATT.''

In financial matters, some progress was made at a yen-dollar meeting held last week on liberalizing the Japanese financial market, but still not at the pace the US wanted.

US Assistant Secretary of the Treasury David C. Mulford said there is a need to accelerate the deregulation process to have the yen reflect the strength of the country's economy.