Official Writes Prescription for Improved U.S.-Japan Relations : Trade: Both nations must doctor economies so that Japan consumes more and U.S. produces more, new Japanese consul general tells a group of businessmen.

NEWPORT BEACH —  The pulse of U.S.-Japan relations, weakened by years of trade friction, is still in good shape but could be revitalized if the economies of the two countries were restructured, a top Japanese diplomat said Wednesday.

“Responsibility is on both sides,” said Kiyohiko Arafune, Japan’s newly appointed consul general for Southern California, Arizona and New Mexico. “This means Japan must consume more and the United States must produce more.”

The United States, Arafune suggested, must cut its budget deficit and U.S. corporate executives must take a long-term view in managing their companies. Japan, meanwhile, needs to restructure its distribution system to make import goods more affordable to Japanese consumers, he said.

Arafune’s talk about U.S.-Japan trade relations--sponsored by the Orange County chapter of the Japan America Society of Southern California and Tokai Bank, one of Japan’s biggest banks--was attended by about 100 business executives from Orange County and elsewhere.

The appointment of Arafune, an Oxford-educated career diplomat, comes at a time when U.S.-Japan trade is at one of its most tense moments. Next month, U.S. Trade Representative Carla Hills is expected to report to Congress on the state of U.S.-Japan trade relations. Last year, Japan was cited under Super 301 of the Omnibus Trade Law for unfair trade practices. If the report concludes that Japan has not done enough to open its markets to foreign trade, Congress may take punitive action that could include trade sanctions.

“We’re in a dilemma,” Arafune said. “We’re trying very hard to open our markets and restructure our distribution system, but it takes time.”

Steven C. Clemons, executive director of the Los Angeles-based Japan America Society, said the Japanese will have to resolve this dilemma soon or face growing anger from Americans frustrated with doing business with Japan.

“U.S.-Japan relations are in a bad shape,” he said. “There’s been a perception that the United States has been abused over a long period of time.”

But Arafune, playing down the trade differences between the two countries, said the problems between the two nations will subside and likened current U.S.-Japan relations to “two golf players having to play in stormy weather.”

Arafune blamed the U.S. media for “exaggerating” the trade problems between the two nations and said news reports have “shown only the bad aspect of the relationship.”

Arafune said Japan must work to prop up its sagging image among Americans. “Japan and the United States cannot re-create themselves but they can try to meet each other halfway,” he said. “All we’re asking is for patience. Japan will change soon.”

Last year, Japan’s trade surplus with the United States fell to $49 billion from $51.8 billion in 1988, according to U.S. government trade figures. The Japanese government has projected that its 1990 trade surplus with the United States will fall further. Trade between the two nations accounted for up to 40% of all world trade last year, Arafune said.

In coming years, Japanese society is expected to undergo profound changes, Arafune said, and those changes should create opportunity for American companies. By the beginning of the 21st Century, Japan will have the oldest population in the world, with one in every four Japanese over 60 years old. U.S. companies could tailor their products to meet the needs of this aging population, he suggested.