U.S. Threatens Action Over Harbor Dispute With Japan

Just when the words “trade friction” were fading from the front pages, a smoldering dispute over alleged unfair treatment of foreign shipping companies in Japanese harbors threatens to provoke tough U.S. sanctions and could become an irritant during Secretary of State Madeleine K. Albright’s scheduled first visit to Tokyo on Sunday.

The U.S. Federal Maritime Commission is threatening to impose penalties of up to $100,000 for each Japanese vessel calling at American ports in retaliation for what it calls discriminatory practices by the Japan Harbor Transportation Assn.

Though their options appear limited, Japanese officials hinted this week that stiff American fines might prompt Japanese shipping companies to slash the number of carriers heading for U.S. ports or to unload their cargo in Canada, bypassing the ports of Long Beach, Los Angeles and Oakland, where most of Japan’s container ships now call.

Though Japanese cargo accounts for close to half the goods entering West Coast ports, U.S. officials said any retaliation against such sanctions would be limited by Japan’s heavy economic reliance on exports of goods to the United States, U.S. officials said.

The capacity of Canadian ports to handle a diversion of cargo traffic would be limited, port officials added. And some carriers lease vast U.S. terminals on terms setting minimum levels of cargo traffic, making it cheaper for such shippers to pay the sanctions than risk breaking the lease.

But Japanese government officials say the dispute could have serious consequences.

“This is a very serious problem, and depending on how it is handled, it could have a significant effect on Japanese-U.S. relations,” a Japanese Foreign Ministry official said.

Japanese officials have already protested the “unilateral” and “unfair” complaint by the U.S. maritime agency. But the European Union is also unhappy with Japan’s port practices and has filed a complaint with the World Trade Organization.

But the U.S. is relying on the FMC, which in November proposed levying sanctions against Japan and could rule on the matter at any time.

The commission met Wednesday but delayed a decision on the sanctions. Commission Secretary Joseph Polking said he could not project when the final decision will be made. Sources here suggested the matter was delayed rather than allowed to complicate Albright’s weekend visit.

Like many intractable trade disputes between the United States and Japan, the two countries cannot even agree on the nature of the port problem.

While the Japanese conceded their ports are cumbersome and in need of streamlining, they say the system is still better than any other scheme for ensuring smooth port operations and labor peace on the waterfront.

Americans and Europeans see the Japanese system as a cartel that micro-manages how shipping firms can run their operations, protects its Japanese members from foreign competition and forces its customers to absorb the highest costs in the world.

According to the Japan Foreign Steamship Assn., it costs a container ship $36,750 to call at Yokohama, compared with $12,350 at the port of Long Beach and only $5,463 to dock in Hong Kong. Japan disputes those figures.

“There is most certainly a very big, uncompetitive and unfair difference” between Japanese and U.S. port arrangements, a Steamship Assn. spokesman said Wednesday.

Japan has more companies than it needs offering terminal services--some 320 stevedoring companies operate in Yokohama alone--while the transfer of much Japanese TV, auto and electronic production to other Asian nations means less cargo is moving through Japan’s ports.

That means prices should fall. But they haven’t, thanks to a port management system that, according to the FMC complaint, keeps shipowners locked into overpriced contracts for harbor services and sometimes requires them to pay for unneeded services.

The FMC also says the Japanese government “appears to blatantly discriminate against U.S. carriers” by effectively denying U.S. or other foreign firms the option of establishing their own stevedoring operations. Japan denies this.

Meanwhile, three companies targeted by the FMC--Kawasaki Kisen, Mitsui O.S.K. Lines and Nippon Yusen--say sanctions would cost them up to $4 million a month and devastate operations.

“We’re innocent bystanders being punished for our country’s policies,” said Kenji Hokazono of the Japan Shipowners’ Port Council. “Our feeling is, why us?”