EUROPE ON SIDELINES IN U.S-JAPAN MICROCHIP ROW Rising imports of Japanese-made cars and electronic goods may upset West European officials, but they generally seem prepared to stay on the sidelines in the latest trade row between the United States and Japan. Japan's huge trade surplus is a sore point in West Europe, as it is in the United States. But U.S. Charges of unfair trade practices involving computer microchips leave Europeans cold. The European Community ran a 18.2 billion dlr trade deficit with Japan last year, and seeks redress when it feels Japanese trade policy hurts Europeans, diplomats and economists said. But only in Britain has there been any suggestion of acting with the U.S. To do something about Japan's huge trade surplus. "The EC is no more illiberal on trade issues than is the U.S.," said Martin Wolf, director of studies at the Trade Policy Research Centre in London. "Basically, their policies are pretty much the same." But that did not mean Europe would support the U.S., Or that the EC would climb on the bandwagon to take advantage of the U.S. Dispute to press its own claims, Wolf said.Basically, Europeans have a different approach to trade problems, he said. "In the U.S., People talk about fair trade, but not here," he added. "In the U.S., It all has to do with the general ethic of free competition, while in Europe, the general approach is that liberal trade is good because it makes countries rich." Wolf said this basic U.S. Attitude explains Washington's tendency to impose so-called "countervailing duties" - an import tax designed to offset advantages alleged to be unfair. In Western Europe, the approach to trade disputes tends to be to try to reach a settlement through negotiation, Wolf said. In the latest U.S.-Japan trade row, President Reagan has threatened to raise tariffs on selected Japanese electronic goods by as much as 300 mln dlrs, alleging that Japan has failed to abide by a 1986 U.S.-Japan pact on microchip trade. But the European Community has challenged the agreement as a violation of General Agreement on Tariffs and Trade (GATT) practices that discriminates against its microchip producers. "It follows that they're not likely to rally to the side of the United States in defence of the agreement," said Wolf. Although British parliamentarians are pushing for a tough line on Japanese trade issues, government officials in the rest of Europe told Reuter correspondents they would let the EC take the lead in any response to the U.S.-Japan trade row. A spokeswoman for the EC Commission in Brussels told Reuters there has been no change in the Community's position since a March 16 meeting of foreign ministers which sent a strong warning to Tokyo on trade imbalances. In a statement issued after that meeting, EC foreign ministers deplored Japan's continued trade imbalance and appealed for a greater Japanese effort to open up its markets. EC External Trade Commissioner Willy De Clercq said after the talks there was a growing impatience with Japan in the EC. Diplomats accredited to the EC in Brussels said they saw no signs of any immediate intention to impose any broad-ranging sanctions against Japan. The EC is anxious to avoid provoking a trade war, they said. Instead, the Community is trying to target problem areas in European trade with Japan, including wines and spirits, cosmetics, and financial services, and will continue talking to try to improve the situation, the diplomats said. In Britain, where the government is angered over the difficulties telecommunications giant Cable and Wireless has faced in its bid to crack the Japanese market, officials said last week that retaliatory action is being considered. But government officials said last night, "We are not talking about days or weeks. This is going to take time." They said the government would consider its options at a cabinet meeting on Thursday, but added that no final decisions were expected. The main thing the British would threaten the Japan with is denial of access to London's booming financial markets, government officials said.