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U.S. RESUMES AUTO TALKS WITH JAPAN

Japanese and American negotiators resumed talks today on Japan's surplus in auto and auto parts trade with the United States, the most contentious trade issue between the two nations.

The sector accounts for about 60 percent of Japan's trade surplus with the United States, which rose to a record $65.7 billion last year.

The auto talks have been deadlocked for the last 18 months.

Signs of tension already were emerging today.

A top Japanese negotiator warned that Tokyo would suspend talks immediately if the U.S. side even mentioned the possibility of imposing trade sanctions.

Yoshihiro Sakamoto, vice minister for international affairs at the Ministry of International Trade and Industry, also said the two sides remained far apart in some areas.

Prime Minister Tomiichi Murayama also expressed pessimism about the talks, Kyodo News Service reported.

But U.S. officials were upbeat about the initial sessions and new U.S. proposals.

Washington is seeking an increase in the number of Japanese dealerships that sell foreign cars, boosting parts purchases by Japanese automakers and easing regulations on replacement parts.

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