U.S. Stands Alone as Tariff Deadline Nears : News analysis: Washington has little international support for its threat to impose stiff taxes on Japanese luxury cars.
As it nears its own deadline for slamming Japan with massive trade sanctions to force open the Japanese auto market, the United States is finding itself standing alone, at least in terms of public support among other nations.
From Asia and Australia to northern Europe, the Clinton Administration’s threat to impose huge taxes on imported Japanese luxury automobiles--a plan being taken up today by negotiators in Geneva--has sent shock waves throughout the increasingly important international trade community.
“International support for an operation of this kind is critical,” said Rufus Yerxa, a professional U.S. trade negotiator who rose to the level of deputy U.S. trade representative before he left the government at the end of 1994. “The United States does not have international support today. This is an important fact the Administration has to deal with.
“The United States should have held the trial before it held the hanging,” he said, paraphrasing with rhetorical punch an assessment of other trade experts.
Jules Katz, another former deputy trade representative, put it even more bluntly: “The United States stands condemned internationally.”
What has left the United States out in the cold is the decision to penalize the Japanese by imposing 100% tariffs on 13 models of luxury cars made by Toyota, Nissan, Honda, Mazda and Mitsubishi without first taking the dispute to the new World Trade Organization. The organization, the newly established referee of international trade disputes, was born out of seven years of negotiations in which the United States played a central role.
The proposed U.S. sanctions, decided upon without international consultation, are so steep that they would price the cars out of the U.S. market, in effect closing off sales of those models in this country. Thus, the sanctions are seen by other nations not only as a challenge to Japan, but also to an internationally supported system of resolving such conflicts.
The United States announced May 16 that it would impose the tariffs on June 28 if an agreement making it easier for U.S. companies to sell automobiles and auto parts in Japan is not reached. The Japanese government responded by filing a complaint with the World Trade Organization, saying that Washington would be unfairly imposing sanctions in violation of international trade regulations.
Mid-level U.S. and Japanese officials are scheduled to meet today at World Trade Organization headquarters in Geneva to begin discussing the Japanese complaint. Talks about the underlying substance of the U.S. allegations are not on the agenda for those discussions, but they almost certainly will be next week, when top-level Administration officials are to meet with their Japanese counterparts in a final effort to resolve the dispute before the June 28 deadline.
There may be some glimmer of wider international support for one aspect of the U.S. position, however. U.S. Trade Representative Mickey Kantor and aides pressing the fight--and also some Europeans trade experts--say other governments are giving signs of behind-the-scenes encouragement for the attempt to force open the Japanese market to foreign goods.
They maintain that in the midst of its argument with Japan--perhaps the most contentious and risky trade dispute involving the United States in years--the Administration is on the leading edge of an apparently popular position: challenging Japanese practices that have been a point of contention for Tokyo’s trading partners for years, even if the United States is using tactics most nations are ready to condemn.
“Most of the world believes our response is not something they are comfortable dealing with,” said Ira Shapiro, the general counsel in the office of the U.S. Trade Representative. Yet those people also believe “that our problem [with Japan] is a very real problem.”
A European trade official, speaking on condition of anonymity, said that in a series of private meetings in Geneva in recent days, it became clear that “there is a good deal of sympathy for the United States.”
“Nobody is convinced the Japanese market is open in the areas the U.S. complained about,” he said. But that doesn’t mean the United States should move unilaterally “without the dispute settlement procedures” of the World Trade Organization having run their course.
“The point was made strongly that commitments were made in the World Trade Organization not to make judgments and determinations that lead to unilateral action,” he said.
Making the situation all the more awkward, the fight is occurring as President Clinton and the leaders of the six other major industrial democracies--Britain, Canada, France, Germany, Italy and Japan--are about to meet at an annual summit, in Canada this year, beginning Thursday evening.
“What we will say to the United States and Japan,” a Canadian official said, “is, ‘Resolve it under the context, please, of the World Trade Organization.’ ”
With the United States hoping that the conference will make progress in other arenas, such as modernizing the way international financial institutions respond to global economic crises, Administration officials say they are concerned that the dispute with Japan not disrupt the wider agenda of the summit meeting.
