Two-day vice-ministerial talks on deregulation between Japan and the United States closed Tuesday in Tokyo with each side demanding further deregulation by the other, a government official said.

Nonetheless, the two sides had "constructive discussions" on some issues and resolved to continue talks in subsequent rounds of negotiations, the Foreign Ministry official said.

The results of the latest round of bilateral deregulation talks are expected to be compiled in a joint report by the time Prime Minister Keizo Obuchi visits Washington in May. Top leaders of the two countries will review the ongoing talks based on that report, the official said.

Out of concern over its rising trade deficit with Japan, the U.S. has intensified its demand for greater deregulation of the Japanese economy. The U.S. in October urged Japan to push forward with deregulation on 270 items, while Tokyo later presented a list of more than 50 deregulation items for Washington to work on.

During the bilateral deregulation talks, held Monday and Tuesday at the Foreign Ministry, Koichi Haraguchi, deputy minister for foreign affairs, led the Japanese delegation in negotiations with his U.S. counterpart, Richard W. Fisher.

Fisher argued that Japanese telecommunications authorities should lower connection fees to the lines of Nippon Telegraph and Telephone Corp., which owns a nationwide network, the official quoted Fisher as saying. The U.S. also urged Japanese medical authorities to introduce further deregulation in retailing medical equipment and other supplies and speed up the screening process for new pharmaceuticals.

The U.S. praised Tokyo's efforts to introduce a "public comment system" beginning in April in which the Japanese government will seek opinions regarding deregulation. The U.S. side also called on the Fair Trade Commission in Japan to tighten regulation on cartels and further promote fair competition in the Japanese market, the official said.

Meanwhile, Japanese requests for the U.S. included the lifting of U.S. regulations on companies' "re-exporting" practices, under which firms operating in the U.S. are required to obtain government authorization when they export products made with U.S. technology or U.S.-made parts to third countries.

This requirement has become a heavy burden on Japanese firms in the U.S., since they have to check their products and calculate the percentage of U.S. parts in them. On this point, the Japanese side expressed concern over U.S. attempts to apply domestic laws to Japanese firms beyond its jurisdiction, the official said.

Regarding Washington's anti-dumping measures, the Japanese side urged the U.S. to base the management of these measures on rules designed by the World Trade Organization, the official said.

The U.S. side, however, reiterated that the anti-dumping issue does not suit bilateral negotiations and that the matter be left to multilateral talks at the WTO, the official said.

Tokyo requested the U.S. to abolish a law that requires automobiles available in the country to carry a label specifying the percentage of U.S. parts used in it, arguing that such a practice may drive Japanese automakers out of the U.S. market.