KOBE — The Japanese economy is still at least two years away from recovering and there are some signs things are bottoming out. But local governments that continue to push third-sector projects mired in red ink and a lack of leadership remain major problems.

That was the message a group of visiting U.S. delegates with the Trade Development Alliance of Greater Seattle took away with them Wednesday, after a two-week tour of Japan that included stops in Sendai, Tokyo, Nagoya, Osaka and Kobe.

Twenty-one delegates from business and industry joined the trade mission to promote Seattle-area businesses as well as learn firsthand about the state of the Japanese economy. “We discussed a number of projects with various businesses and local governments, including the possibility of Sendai opening up a direct air route to Seattle. Nagoya officials expressed an interest in what Seattle was doing, and may also be interested in opening up a direct route when the new Chubu airport opens,” said William Stafford, president of the alliance.

“In addition, REI, a major Seattle company that sells climbing and camping gear, signed a deal to open up a branch in Tokyo next year,” Stafford said.

For the most part, the visitors were here to observe and listen to Japanese officials. Washington state is the only U.S. state that is running a trade surplus with Japan, Stafford said.

Overall, there was a sense that times remained tough. “There was a sense that local officials were in denial, especially over their debts and over the lack of feasibility of numerous third-sector projects,” Robert Anderson said. “In addition, while there is a lot of talk about deregulation and decentralization, people we spoke with say that Tokyo is still very much in charge, which means weak local leadership,” he added.

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