Like the U.S., Europe Prepares to Take Steps Against Japanese Goods

As the United States struggles to stem the flood of Japanese imports, the 12 nations of the European Community are drawing up their own list of measures to restrict access of goods from Japan.

Because of an inherent opposition to trade restrictions of all kinds by economically powerful West Germany, any joint community package against Japan is likely to be limited in nature and certainly less dramatic than the recent 100% tariffs imposed by the Reagan Administration on Japanese television sets, laptop computers and power tools.

But the fact that joint action is being undertaken at all by the 12 European partners is a reflection of the mounting and increasingly widespread frustration here, much as in the United States, from an inability to penetrate Japan’s heavily protected domestic markets at a time of large and growing trade deficits.

Two New Initiatives

EC officials say that the action marks the first time in the community’s 30-year history that a trade issue has generated such a unified response on a broad range of measures against a single country.

“These issues need immediate, concrete action by Japan if current tensions between the EC and Japan are to be assuaged,” warned the community’s commissioner for external affairs, Willy DeClercq, last week after meeting with senior Japanese officials in Tokyo.

Two new EC initiatives are aimed at preventing Europe from being overwhelmed by the products affected by the new U.S. tariffs.

On April 27 in Luxembourg, EC foreign ministers agreed to implement a system requiring import licenses on these products beginning Wednesday.

The prospect of imposing tariffs on these goods if import volume rises sharply is also under consideration. A proposal to prepare, but not implement, such tariffs is expected to win acceptance at the EC’s next foreign ministers meeting, scheduled late this month.

EC officials also express concern that other Japanese products might be increasingly attracted to Europe, where currencies have held their value with the yen as the dollar has plummeted and made Europe a potentially easier, more lucrative market.

That meeting is also likely to adopt two other measures, sources say:

- An initiative to pressure the Japanese government to provide West European banks with easier access to Tokyo’s important financial markets.

- A move to boost tariffs on selected Japanese imports to compensate for Japan’s easier access to Spanish and Portuguese markets after those two countries entered the community last year.

At the foreign ministers meeting in June, the 12 are likely to consider extending to components the anti-dumping duties that were placed on imported Japanese photocopiers earlier this year.

The 20% duty, effective in February, came only after Japanese importers had captured roughly 80% of the community’s market, several European-based companies had given up their own production and the remaining five European producers had formally sought protection.

“We decided enough was enough,” Rank Xerox executive Jimmy Bake said. “We were getting had.”

Actions Under Way

The proposal to extend the duty to components follows moves by eight Japanese companies to circumvent the new duties by establishing so-called “screwdriver” operations--importing the machines from Japan in knocked-down form and assembling them in Europe before sale.

Among other EC actions already under way:

- The EC Commission in Brussels last month began investigating charges that Japanese computer printers were being dumped onto markets within the community.

- The General Agreement on Tariffs and Trade, acting on an EC Commission complaint, last month established a panel to examine whether the September, 1986, U.S.-Japan pact establishing prices on semiconductors constitutes unfair price fixing that discriminates against European producers.

- GATT is also investigating an EC complaint that Japan’s artificially high prices for domestic copper ore and concentrate have robbed European refiners of raw materials essential for their survival.

The string of measures aimed at Japan is unprecedented, according to EC officials.

In Brussels, EC officials said the new sense of urgency has eroded at least some of West Germany’s opposition to action against Japan.

The volume of Japan’s trade with the EC nations is far smaller than its volume with the United States. Tokyo’s $58.6-billion trade surplus with the United States last year exceeded the $44 billion of total 1986 EC-Japanese trade.

But, much as has happened with the United States, the deficit with Japan has grown alarmingly in recent years, rising to well over $20 billion last year. It continues to grow. Figures just published for March showed the biggest one-month deficit, $2.1 billion.

In automobiles alone, Japanese manufacturers increased sales in the 12 EC countries by more than 30% during the first three months of this year when their total auto market declined by 3%.

It was against this backdrop of an accelerating Japanese trade juggernaut that a political bombshell involving Japan’s treatment of the British telecommunications giant, Cable & Wireless PLC, burst in London and quickly reverberated through the European Community. EC officials in Brussels said the incident significantly hardened views among member countries.

The British firm, which holds the largest foreign stake--20%--in a consortium bidding to upgrade Japan’s antiquated international telecommunications system, was suddenly offered a share of just 3% in the project by Japan’s Ministry of Posts and Telecommunications.

The U.S. companies, Pacific Telesis and Merrill Lynch & Co., which have smaller shares in the same consortium, were similarly hit.

While the Japanese said they were trying to parcel the work fairly between rival bidders, senior British and U.S. government officials saw it as a flagrant example of Japan’s refusal to open its own markets to foreign competition.

In Britain, where the idea of “fair play” remains an important national value, the reaction was immediate. Prime Minister Margaret Thatcher declared the Cable & Wireless affair a test case, threatened to revoke the licenses of the 58 Japanese financial institutions operating in important London markets and sent a government minister to Tokyo to convey in person the gravity of the action.

Thatcher’s call for EC action found a receptive echo, especially from France, where imports from Japan last year were more than double France’s exports to Japan.

Indeed, there is a quiet admiration in many community capitals of some French measures that are seen as a continental version of Japan’s own non-tariff barriers.

Importers of videotape recorders, for example, could clear customs only at the city of Poitiers, about as far as possible from any major French port.