The Pacific : Japan Looking to GATT to Ease Tensions : Trade: But the new accord is unlikely to have any immediate effect on Tokyo’s disputes with U.S.
Japan, which made some key concessions to be included in the new world trade accord approved by its lower house of Parliament on Friday, believes the agreement will eventually make it easier to resolve international trade frictions.
But the expanded General Agreement on Tariffs and Trade, which passed the U.S. Congress last Thursday, will have little immediate effect on U.S.-Japan disputes, particularly tensions over the huge U.S. trade deficit with Japan in automobiles and auto parts. Such trade accounts for about two-thirds of the overall $60-billion U.S. deficit with Japan.
For one, Tokyo and Washington disagree on whether the dispute-settlement mechanism of the World Trade Organization, established under the expanded GATT, is appropriate for the dispute.
Washington has threatened sanctions against Japan under Section 301 of U.S. trade law if Japan refuses to take measures to increase purchases of replacement auto parts. Tokyo has said that it would probably appeal any U.S. actions under Section 301 to the WTO. But Washington has insisted that nothing in the agreements setting up the WTO would block use of such retaliatory trade measures.
Additionally, the new accord does not address specific points of the dispute over automobiles.
Washington has pressed especially hard for Tokyo to agree to “results-oriented” measures to boost exports of American automobiles and auto parts to Japan. The United States has suggested that the Japanese government relax various regulations that discourage the import of foreign auto parts. Washington also wants Tokyo to help boost the number of dealerships in Japan that carry foreign automobiles, and to encourage Japanese auto makers to increase their purchases of foreign parts.
But Tokyo insists that it cannot yield to many of the key U.S. demands. Japanese officials have described regulations in the replacement auto parts market as necessary for safety, and have said some other key U.S. requests would require improper interference by the government in the affairs of private corporations.
The United States and Japan have not set a date to resume talks on automobiles and auto parts. Negotiations are moving forward, however, in some other areas. The two sides are due to meet this week in Washington to try to hammer out a final agreement on market-opening measures for Japan’s $4.5-billion flat-glass market.
The atmosphere for the bilateral talks may be helped by renewed enthusiasm in Japan for the new world trade agreement.
Japan’s upper house of Parliament is expected to approve the GATT agreement this week, having largely defused domestic opposition.
As a key part of last year’s global agreement to expand GATT, Japan promised to gradually open its rice market to foreign imports, promising to allow in rice supplies equal to 4% of domestic consumption in 1995, with that figure rising to 8% by 2000. Japanese farmers bitterly opposed the concession when it was first made.
Now, however, as part of a package of legislation to approve the agreement, Tokyo is enacting a six-year plan to spend about $60 billion in rural areas to help farmers cope with the impact of liberalized agricultural trade. This plan, which includes direct subsidies to farmers and funding for rural infrastructure projects, helped to ensure easy passage by Japan’s parliament of the legislation to approve the trade accord.
Japanese government officials and business leaders place high hopes in the idea that multilateral rules set up and enforced by the WTO will make it easier to avoid bilateral disputes.
“I think all Japanese businessmen care very much about what happens in the future with WTO,” said Masaru Yamano, vice chairman of Sanyo Electric Co. Ltd. “For world peace management, it’s the United Nations, but as for economic matters, the WTO should play the same role as the (United Nations). The settlement of international disputes should be done through the WTO.”
