U.S.-JAPAN COMPUTER CHIP, INSURANCE ISSUES UNRESOLVED.

Byline: Associated Press 

Within hours of a midnight deadline, the United States and Japan continued negotiating Wednesday to resolve disputes over foreign sales of computer chips and insurance in the Japanese market.

``We're working toward an agreement. We're not there yet. At this hour it's really too early to say which way it's going to go,'' Jay Ziegler, chief spokesman for the U.S. trade representative, said by telephone from Vancouver, British Columbia, where the talks were being held.

Previously the White House said it would hold Japan to the July 31 deadline, which was set at a meeting in June between Japanese Prime Minister Ryutaro Hashimoto and President Clinton.

It's not clear what would happen if the parties failed to reach an agreement.

Laura Tyson, head of the president's National Economic Council, has refused to say specifically what the United States would do if no deals are reached by the July 31 deadline. Last year both countries reached agreement to remove barriers to the sale of American autos and auto parts in the Japanese market under the threat of $6 billion in sanctions against Japanese luxury cars.

``We have a lot of ground to cover and it's not lost on anyone we're running out of time,'' said a U.S. official at the trade talks who spoke on condition of anonymity.

The U.S. and Japanese computer chip industries met throughout the day Wednesday. Following that meeting, acting Trade Representative Charlene Barshefsky planned to meet with her Japanese counterpart, Shunpei Tsukahara.

The computer chip dispute involves a 1991 agreement, bitterly opposed by Japan, that established a 20 percent target for foreign market share of the huge Japanese semiconductor, or computer chip, market. The Japanese for years have blasted the deal as managed trade and said they would never be forced into another such arrangement with the United States.

The Japanese have raised the point that the foreign market share is now above 30 percent as evidence the agreement is no longer needed. But the administration has worried that without some sort of transition agreement the gains foreign chip producers have made in the Japanese market could be lost.

The United States has insisted there be some mechanism to ascertain foreign market share of Japan's chip consumption.

Japan has proposed a joint statement of sorts that would pledge bilateral commitment to cooperate in the semiconductor industry, combined with creation of a global semiconductor body that would include other nations such as South Korea and European countries.

But the United States has argued that the current calculation method of the foreign share of Japan's market is accepted by both countries.