EC WARNS U.S. AND JAPAN ON TRADE TENSIONS The European Community (EC) yesterday warned Japan and the United States, its main trading partners, that friction over trade issues is affecting the EC's relations with both countries. EC foreign ministers issued a statement deploring Japan's continued trade imbalance and appealed for the country to make a greater effort to open up its markets. They also said they were disturbed by a draft bill before the U.S. Congress that would impose permanent quotas on textile imports and were prepared to react. The U.S. Administration has already distanced itself from the bill. EC External Trade Commissioner Willy De Clercq has written to his U.S. Counterpart, Trade Representative Clayton Yeutter, outlining the EC's concerns. The statement said ministers were very disturbed by U.S. Moves towards protectionism. "The adoption of such measures would not fail to have a negative effect on the process of multilateral negotiations just started, as well as on bilateral relations," it said. Any unilateral U.S. Moves would leave the EC no option but to react according to the laws of the General Agreement on Tariffs and Trade, it said. In a separate statement on Japan, the EC ministers said they "deplore the continued aggravation of the imbalance in trade (and) expect Japan to open up its market more." The statement said the EC would continue to insist that Japan boost imports and stimulate domestic demand. Ministers also called on the EC Commission to prepare a report on U.S.-Japanese trade for July this year to enable them to take appropriate action where necessary. One diplomat said the call for a report showed ministers were determined not to let the Japanese question drop. "It will be back on the table again and again," the diplomat said. De Clercq, talking to journalists during the meeting, said, "There is a certain nervousness, a growing impatience within the Community concerning trade relations with Japan." But diplomats said the EC is keen to negotiate with Tokyo to solve the problem rather than embark on a costly and damaging trade war, and the ministers called for more cooperation with Japan in industry and research.