Japan Sees No Progress in China Trade War Talks

July 2, 2001 - 0:0
TOKYO Japanese Trade Minister Takeo Hiranuma said on Sunday Japan would not bow to Chinese demands to drop import curbs that have sparked a trade row and officials said the dispute threatened to become a long-drawn out trade war.

Beijing must learn to play by global trade rules if it is to joint the World Trade Organization (WTO), Hiranuma told a TV Asahi talk show.

Talks this week aimed at resolving the festering trade dispute between the giant Asian trading partners were unlikely to make progress, with both sides set to stick by the punitive tariffs slapped on each other's goods, Reuters quoted officials as saying.

China last month slapped 100 percent punitive tariffs on imports of Japanese vehicles, mobile phones and air conditioners.

Beijing said the move was in retaliation for Japan's imposition of emergency, temporary curbs in April on shiitake mushrooms, leeks and rushes for traditional tatami mats.

Japan says its curbs are allowed under WTO rules.

"We will stand by our principles at a meeting of senior officials from July 3," Hiranuma said. The two sides are due to hold talks on Tuesday and Wednesday in Beijing.

But no swift end is seen to the trade war, which has sparked anger not only from China but also dissatisfaction in Japan where more and more companies want the government to move away from "old Japan" protectionism to foster competition.

"It is a step forward that we sit at the table for talks, but there may be a long way to go," Kyodo news agency quoted one unidentified trade official as saying.

The sticking point appears to be WTO rules.

"China is about to join the WTO and Japan has supported that. If it is joining the WTO, it should follow WTO rules," Hiranuma said.

"A global free trade system will be created after China enters the WTO, but if Japan surrenders to threats, there will be no ground for using the WTO (rules)," he said.

Indeed, the trade war could drag on until China's entry into the WTO, which could come as early as the end of this year, Kyodo quoted the trade official as saying. The WTO provides mechanisms for resolving such trade disputes.

China appears to be counting on domestic Japanese divisions over the trade curbs in its battle to persuade Tokyo to lift the penalties, some as high as 266 percent, the trade official said.