As the US Trade Representative, Mickey Kantor, sat down with Yohei Kono, the Japanese Foreign Minister, and Ryutaro Hashimoto, the Trade Minister, all that was certain was that the negotiations would continue up to - and perhaps beyond - the midnight deadline the Clinton administration had set. Whatever the outcome, Mr Kantor has announced a press conference at noon today at which he will announce any US reprisals.In fact Japan faces a twin sanctions threat. One, involving government procurement in telecommunications and medical equipment, could start after 30 days with US curbs on Japanese companies bidding for federal contracts.The other involves the so-called Super 301 trade law, application of which sets off a gradual process punishing Japanese manufacturers in specific sectors where US producers suffer discrimination in Japan. Here the prime candidates are plate glass and, above all, the super-sensitive car and car component industries, which alone account for half Japan's dollars 60bn annual trade surplus with the US.Faced with the risk of currency turmoil, Washington is expected to avoid harsh reprisals. Most experts predict agreement in some areas and disagreement in others, leading to the application of relatively mild counter-measures.But if the markets decide that 'trade war' has been declared the consequences could be severe.. BRITISH Aerospace faces an uphill battle to convince the City of the logic of its proposed bid for VSEL, the Trident submarine builder. Analysts were becoming increasingly sceptical about the plan as speculation grew in some quarters yesterday that the General Electric Company was preparing a cash bid for VSEL.

However, the stock market appeared to discount the likelihood of a bid battle by marking VSEL shares down 18p to pounds 12.10. BAe is understood to be negotiating to buy the shipbuilder in an agreed deal that would be worth no more than pounds 12 per share. Most analysts believe the company is worth between pounds 12 and pounds 13 a share.Talks between BAe and VSEL are likely to continue for at least another week, and sources indicated that they would be called off if BAe could not agree a satisfactory price. City analysts, meanwhile, were cautious about the strategic value of the deal to either company.'The industrial logic is not overwhelming,' Keith Hodgkinson of Lehman Brothers said. 'It could produce some benefits, but it is not the perfect solution.'BAe believes that VSEL would strengthen its position as a prime contractor in defence projects, bringing benefits to both companies. However, some analysts said the most obvious benefit to BAe would be purely financial because of the pounds 250m of net cash in VSEL, which is likely to rise to more than pounds 400m over the next few years as the Trident programme comes to an end. 'The strategic fit between the two companies is pretty tenuous,' Nick Judge of NatWest Securities said.Although BAe makes naval missile systems, most observers see no obvious fit between its other businesses and VSEL.GEC, with its pounds 1bn cash pile, would be in a position to offer a more attractive cash deal to VSEL shareholders at more than pounds 12 a share, valuing the company at about pounds 500m.

The Ministry of Defence might object to such a deal because, with its Yarrow shipyard, GEC would have a monopoly of naval shipbuilding.'It's evenly balanced whether GEC will bid,' Mr Hodgkinson said.. NFC, the transport and logistics group, has appointed Sir Christopher Bland, the former head of LWT, as its chairman, writes Nigel Cope. Sir Christopher will join NFC in December, succeeding James Watson, who is retiring. Sir Christopher left LWT in February with pounds 9m of shares following the takeover by Granada. At NFC he will work two or three days a week and be paid a salary of pounds 200,000 a year. He is on a 12-month rolling contract. The appointment goes some way towards solving the management gap at the top of the company.