Japan, S. Korea Riled Over New U.S. Trade Law : EC Says Retaliation Will Be Weighed Case by Case

Japan said Wednesday that it had formally protested to the United States over its new trade laws, while the European Community said it would consider possible retaliation on a case-by-case basis.

President Reagan signed the trade bill into law Tuesday in an effort to force open foreign markets to U.S.-made goods. The law compels U.S. retaliation against countries deemed to have set up unfair barriers to U.S. imports.

Japan called the bill protectionist, confrontational and a threat to world trade. The law would have a tremendous impact on Japan-U.S. relations, said a letter to senior U.S. officials from Japan’s U.S. ambassador.

“Such a unilateral and confrontational approach . . . may well cause a contraction of world trade,” the letter said. Trade Minister Hajime Tamura, in a statement, urged Washington not to put the law into effect.

Fear of Counter-Reactions

In South Korea, a Foreign Ministry statement accused the U.S. trade bill of having “all the protectionist elements which aroused so much concern and protest from Korea and many other trading nations.”

“We are particularly concerned with the likely counter-reactions from U.S. trading partners,” the statement said, adding that the legislation would encourage enactment of similar laws or retaliation.

The South Korean Foreign Ministry urged the Reagan Administration to ensure that “the law be implemented in such a way as not to adversely affect the smooth growth of the Korea-U.S. trade relationship.”

But the European Community viewed the bill as so broad-based that it could only respond on a case-by-case basis, a spokesman for the Executive Commission, the EC’s executive body, said in Brussels.

“Only the future will show whether the implementation of this bill will affect the credibility of the Uruguay Round of talks and the liberalization of international trade,” the EC’s commissioner for external relations, Willy de Clercq, said in a statement.

“But this legislation nonetheless confirms a tendency toward a unilateral interpretation of international trade rules,” he added.

De Clercq added that he will ask a meeting of EC ministers next month to formulate a common overall position on the bill.

West Germany’s View

“The European Community is prepared to defend its legitimate interests every time they are put at stake by unilateral trade measures . . . which violate GATT,” he said.

West Germany, in contrast, thought the bill was less protectionist than had been feared, said government spokesman Friedhelm Ost. The country hopes the next U.S. president will work toward a further opening of world markets, he added.

U.S. Trade Representative Clayton K. Yeutter defended the bill Wednesday, saying it was not protectionist and that he was not concerned about possible retaliation.

“If they (U.S. trading partners) are engaging in exercises that will open up their markets and provide a free and open trading environment to the world, they have nothing whatsoever to fear in this bill,” Yeutter said on NBC’s “Today” show.

“Over the long haul, the trade bill will help on the deficit--that is over the next 10 or 20 years,” he added.

‘Not Japan-Bashing’

A Japanese foreign ministry official, noting that Japan’s U.S. imports rose 41% in the first half of 1988, said of the bill: “We know this act is not really Japan-bashing but nevertheless Japan is a major trading partner.”