From iatp@igc.apc.orgFri Sep 8 18:30:58 1995 Date: Wed, 24 May 1995 14:49:09 -0700 (PDT) From: IATP To: Recipients of conference Subject: Trade News 5/2595 Trade News Produced by the Institute for Agriculture and Trade Policy Volume 4, Number 8 Thursday, May 25, 1995 _________________________________________ Headlines: - CHINA MOVES TO JOIN WTO - U.S. TAKES ACTION ON JAPANESE AUTO PARTS - EU CONTEMPLATES FREE-TRADE ZONE WITH U.S. - JAPANESE FIRM ACCUSES SOUTH KOREAN EXPORTERS OF DUMPING IN EU - NEW "UNFAIR TRADE" BILL OFFERED IN U.S. CONGRESS - U.S. TRADE GAP WITH JAPAN/MEXICO SOAR _________________________________________ WTO NEWS SUMMARY _________________________________________ CHINA MOVES TO JOIN WTO Earlier this month, China reopened its bid to join the WTO amid signals from the world's leading industrial powers that prospects for restarting full negotiations depend mainly on Beijing. The Quad powers --t he United States, European Union (EU), Japan and Canada -- said after a meeting in British Columbia on May 5 that they were prepared to respond positively, provided China showed greater readiness to liberalize its economy and to comply with international trade rules. China's top trade negotiator Long Yongtu said: "We are ready to reciprocate with flexibility if major WTO members carry out their promise to be positive, flexible and pragmatic." He added, however, that he thought the talks would be "very difficult." China had hoped to enter the WTO earlier this year, but negotiations broke off in mid-December when many WTO members demanded that China make stronger commitments to open its market to foreign goods and services, reform its economy, and respect multilateral disciplines. Since then, the atmosphere has been improved by Beijing's agreement with the United States to enforce intellectual property rights more effectively, and by Washington's acceptance in principle of China's request to join the WTO as a developing country. P.T. Bangsberg, "China Says It Won't Jettison National Interests to Join WTO," JOURNAL OF COMMERCE, May 16, 1995; Guy de Jonquieres, "China Reopens Talks on WTO Membership," FINANCIAL TIMES, May 9, 1995. _________________________________________ REGIONAL/BILATERAL AGREEMENTS _________________________________________ U.S. TAKES ACTION ON JAPANESE AUTO PARTS On May 10, U.S. Trade Representative Mickey Kantor announced that the United States would file a formal complaint with the Geneva- based World Trade Organization (WTO) charging Japan with discriminatory practices in the automotive sector. Kantor also announced that the United States would take unilateral action, under Section 301 of U.S. trade law, to pressure Japan to open its auto parts market to U.S. and other imports. Kantor justified the U.S. move -- particularly its Section 301 action -- by declaring that Japan's auto trade practices have "nullified and impaired" past Japanese concessions to the United States, are "unreasonable and discriminatory," and "burden or restrict U.S. commerce." Under Section 301 action the U.S. will impose 100 percent tariffs on imports of Japanese luxury cars produced by Japan's five leading auto makers: Honda, Toyota, Nissan, Mazda, and Mitsubishi. Imports of these vehicles were valued at approximately $5.9 billion in 1994. According to Kantor, the sanctions will go into effect on June 28 if a satisfactory arrangement cannot be worked out with Japan. The WTO dispute-settlement process could take as long as a year. Kantor's announcement of Section 301 action drew sharp criticism from Japanese officials. Yoshihiro Sakamoto, vice minister of Japan's Ministry of International Trade and Industry (MITI), declared that Japan would not be bullied into accepting "managed-trade" policies. "If the Americans think that once again at the very last minute the Japanese will give in, they are wrong, completely wrong," said Tomohiko Kobayashi, Japan's envoy to the European Union (EU). The U.S. action also was condemned by EU officials who said the United States, by imposing sanctions on its own, is acting as both prosecutor and judge, sentencing Japanese auto makers before its case against them in the WTO is presented. By doing so, argued EU trade commissioner Sir Leon Brittan, the United States is threatening the world trading system. Informed sources say the U.S.-Japanese auto dispute could be a key issue at the Group of Seven (G-7) economic summit next month in Halifax, Nova Scotia when President Clinton confers with Japanese Prime Minister Tomiichi Murayama and other world leaders. "Kantor Maintains Hard Line in Trade Squabble with Japan," ASSOCIATED PRESS, May 23, 1995; Caroline Southey, "Envoy's Intervention Fuels Sanctions Row," FINANCIAL TIMES, May 23, 1995; "Kantor Assails Europeans Over Trade Criticism," NEW YORK TIMES, May 19, 1995; Richard Lawrence, "US Will Lodge WTO Complaint Against Japan," JOURNAL OF COMMERCE, May 11, 1995; Clay Chandler, "Japan Targeted on Two Fronts; US Files Complaint, Will Hike Auto Tariffs," WASHINGTON POST, May 11, 1995; David E. Sanger, "US Is Moving Against Japan Trade Practices on Two Fronts," NEW YORK TIMES, May 11, 1995. EU CONTEMPLATES FREE-TRADE WITH U.S. Last month, the EU's top trade official Sir Leon Brittan announced that the European Union (EU) will study the feasibility of establishing a free-trade zone with the United States. "We have just come through an ambitious tariff-cutting negotiation (in the GATT), and need to see whether there are realistic prospects for further cuts," he said. But he cautioned against excessive optimism: "We must not create false expectations, nor get carried away by seductive ideas which cannot be translated into reality." He said the EU's study will be completed by the end of 1995 and that farm products would not be part of a free-trade deal. A free-trade zone would have to be compatible with the rules of the WTO. Bruce Barnard, "US, EU Plan Discussions on Implementing Free-Trade Zone," JOURNAL OF COMMERCE, April 28, 1995. JAPANESE FIRM ACCUSES SOUTH KOREAN EXPORTERS OF DUMPING IN EU Earlier this month, Japan's largest construction equipment group, Komatsu, lodged a complaint with the European Commission alleging that South Korean exporters are dumping excavators in the EU. It is the first time a Japanese company has asked European authorities to investigate alleged dumping -- the export of products at artificially low prices, which injure competitors in importing countries. Komatsu's complaint is part of a larger action brought by more than 10 European excavator companies and the Committee for European Construction Equipment. The complaint alleges that Korean excavator manufacturers, led by Samsung, Hyundai and Daewoo, have priced exports to the EU at least 25 percent lower than their home market price. The European Commission is expected to open an anti-dumping investigation soon. If it finds Korean exports are being dumped, it may impose duties on them or require producers to raise prices. Guy de Jonquieres, "Komatsu Accuses S. Korean Exporters of Dumping in EU," FINANCIAL TIMES, May 3, 1995. _________________________________________ WORLD TRADE ROUND-UP _________________________________________ "UNFAIR TRADE" BILL OFFERED IN CONGRESS On May 3, House Minority Leader Richard Gephardt introduced a bill, co-sponsored by Senator Jay Rockefeller, to grant the president power to impose economic sanctions on Japan and other countries judged to trade unfairly. The bill gives the president the power to propose laws to Congress that can be used to get around the WTO. The principle for these laws would be "reciprocity," which Gephardt defined as erecting the same kind of regulatory barriers to Japanese imports that U.S. goods face when entering Japan. Under the bill, statutes needed to establish these "reciprocal" penalties would be brought to Congress under so-called "fast track" rules which require quick Congressional votes without amendment. According to a survey of House aids, although the bill could attract some votes from a Republican majority more supportive of tough trade action than in the past, the measure most likely will fail in the partisan atmosphere of Capital Hill because it will be viewed as a Democratic initiative. John Maggs, "Gephardt Offers Tough Legislation on Unfair Trade," JOURNAL OF COMMERCE, May 4, 1995. U.S. TRADE GAP WITH JAPAN SOARS In March, the overall U.S. trade deficit narrowed slightly, but the gap with Japan soared. The trade report from the Department of Commerce showed that the overall deficit for goods and services narrowed 0.4 percent in March to a seasonally adjusted $9.12 billion, compared with February's deficit of $9.15 billion. The U.S. deficit with Japan, however, shot up 30 percent to $6.14 billion, close to the all-time high of $6.7 billion set in October, 1994. Japanese shipments to the United States rose by 21 percent with one-fourth of that increase coming from Japanese automobiles and parts. The overall U.S. deficit with Japan hit a record $66 billion last year, with nearly 60 percent of that in autos. "Overall US Trade Deficit Narrows in March, But Gap With Japan Soars," ASSOCIATED PRESS, May 19, 1995. _______________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. E- mail versions of Trade News are available free of charge for Econet/IATP Net subscribers. For more information about fax or mail subscriptions, contact: Institute for Agriculture and Trade Policy, 1313 Fifth Street S.E., Suite 303, Minneapolis, MN, 55414 Phone 612-379-5980. To learn more about IATP's contract research services, please contact Dale Wiehoff at dwiehoff@igc.apc.org