BALDRIGE SEES NO TRADE WAR WITH JAPAN
U.S. Commerce Secretary Malcolm
Baldrige said the dispute between the U.S. And Japan over
computer chips will not develop into a full-scale trade war.
    "I think both sides will try and make sure that this doesn't
start a trade war -- as a matter of fact I'm positive that
there won't be a trade war with Japan," Baldrige said in a
television interview.
    President Reagan last week imposed penalties over Japan's
alleged failure to adhere to a July 1986 agreement to stop
selling semiconductors in third countries at below cost and to
open its own market to U.S.-made chips.
    Despite Tokyo's displeasure with the penalties, Baldrige
said Japan would refrain from taking retaliatory steps that
would lead to a trade war, largely because Japan itself would
have the most to lose in such a conflict.
    "Japan, I think will -- because they have the means to do it
-- face up to the fact that as the second largest industrial
trading power in the world they have to live up to their
responsibilities of free trade," he said.
    "I think we'll work our way out of this," he added. "It's not
going to be easy. But I guarantee you, we're not going to have
a trade war."
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