TOKYO. July 6: World economic superpowers Japan and the United States reported progress today in resolving a long-running trade dispute threatening the success of the G-7 rich nations summit about to open In Tokyo, reports Reuter.

President Bill Clinton Dew in and immediately plunged into discussions with host Prime Minister Ktlchi Mlyaza wa. hoping to smooth ties ruffled by persistent hug" Japanese trade surpluses

Both men later toM reporters they made progress in their one—hour meeting

CHnton told reporters as he met Japanese Prime Minister Kiichi Mtyazawa. “I do believe we made some progress* in the talks aimed at setting a new framework to govern economic relations between the two financial superpowers.

Miyazawa was also asked how the trade talks were going. "People are working very hard on that now.' he said

The two leaders were meeting ahead of the Group of Seven (G 7) Industrial nations' summit opening In the Japanese capital on Wtdnesfov

Chnton and Mtyazawa said negotiators would continue diorusotona In hopes of an ac cord over the next few days as they and the leaders of Britain. France. Italy. Canada and Germany meet to discuss gtobal economic Issues

The three-day meeting be gms tomorrow with other international issues being pushed into the background by mounting economic woes in all the world's richest industrialised countries.

Compounding the problems for other arriving leaders was Miyazawa's current lame duck status.

Observers said he was in no position to cut any far-reaching deal as he campaigns for July 18 elections in which polls show his long-ruling Liberal Democratic Party is likely to lose its parliamentary majority.

An opinion poll released here Tuesday showed Clinton highly unpopular in Japan for a US President, increasing the risk that any agreement with his involving concessions from Japan could hurt Miyazawa politically.

Earlier, European Commission Vice President Leon Brittan said he had pressed the Japanese Prime Minister at a midday meeting to cut Japan's trade surplus with the continent.

We made it quite clear that we do not believe in managed trade, Brittan said. We do think Japan’s balance of payments as a proportion of GNP (Gross National Product) is a macroeconomic problem for Japan and

the rest of the world.

The Prime Minister, said Brittan, “made no promise to take specific action, but to be fair, he said he recongnised the gravity of the situation."

The G7 countries have dampened expectations of a breakthrough on trade here, suggesting they would settle for a commitment to conclude the Uruguay round of trade talks under the General Agreement on Tariffs and Trade (GATT) this year.

Clinton has in recent days backed away from his earlier tough talk on his country's stubbornly high trade deficit with Japan, stressing instead the need for a multilateral attack on unemployment, which remains high in North America and is nearing post-war record levels in western Europe.

An official travelling with Clinton as he flew to his first-ever G7 Summit said the US administration was optimistic that some sort of general agreement on market .access under global trade rules could be reached in Tokyo.

But, the official added, if we don't get it, it’s not crippling. It would not be a disaster.

Japanese Labour Minister Masakuni Murakami said Miyazawa would back Clinton

in his plan to call on his G7 partners to hold a ministerial meeting sometime this year to tackle unemployment, which is also rising in Japan, although still low by western standards.

Yet economists warn that without a new GATT agreement, politicians may give in to powerful protectionist pressures at home and could resort to trade-throttling measures that would stifle Job creation.

Clinton acknowledged those anxieties during a speech in San Francisco on Monday when he stressed the US commitment to an open world trading system.

We have to coordinate our policies and open new markets if we want new Jobs and high incomes for our people, he said.

France in particular has expressed concern that the current system is unfair to Europe, saying the exploitation of labour and the lack of protection for workers in some developing countries is undercutting some European industries.

French President Francois Mitterrand, who will be the last G7 leader to arrive here when he flies tn Wednesday morning, warned last week that it would be unwise to Expect a major breakthrough at the summit.