``The United States has reiterated time and again Japan must be an engine of growth for Asia,'' US trade representative Charlene Barshefsky told reporters after an hour-long, closed-door session with her Japanese counterpart, trade minister Mitsuo Horiuchi.

``It must, in addition, apply physical stimulus measures, as well as dealing appropriately with the banking sector, deregulate and open its economy,'' said Barshefsky on the first day of talks between trade ministers of the 18 members of the Asia-Pacific Economic Cooperation Forum. These APEC meetings are a test of Japan's willingness to do just that,'' she said.

A senior official in Japan's ministry of international trade and industry Atsuo Shibota said Tokyo believes its 16 trillion yen (118.5 billion dollars) stimulus package andtax cuts will boost its deteriorating economy and reduce its trade surplus with the United States, which has risen 41 per cent since May 1997.

Malaysia, one of the APEC countries socked hard by the year-long Asian economic crisis, also politely called on Japan to put its house in order. We in Malaysia, we don't want to tell Japan what to do, definitely not,'' said Malaysian trade minister Rafidah Aziz.

But if Japan takes whatever is necessary domestically, that will have the necessary positive impact for the region.'' The US and Japanese strategies for lifting trade barriers and lowering tariffs for some 1.5 trillion dollars worth of goods and services differ widely. In negotiations leading up to the talks, senior-level officials indicated Japan was holding up a plan to begin liberalising trade in nine industries by next year.

APEC's aim is free trade among the developed member nations by 2010 and developing countries by 2020.

Negotiators are striving to eliminate tariffs and other trade barriers inthe areas of environmental products and services, energy, fisheries, forestry, toys, jewellery, medical goods, chemical products and telecommunications. The liberalisation process is slated to begin in 1999, based on an early voluntary sectoral liberalisation'' agreement reached at last year's APEC summit in Vancouver and expected to be ready for final signatures by the APEC summit of world leaders in Kuala Lumpur in November. Shibota told reporters that Horiuchi told Barshefsky during their talks that fast-track liberalisation should be carried out on a voluntary basis.