Japan blinks in port dispute Christmas trade war averted

U.S. shippers win access in accord

October 18, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

U.S. and Japanese officials averted a trade crisis yesterday, just hours before an order was to be imposed banning Japanese ships from American ports and detaining those already docked in U.S. harbors.

Officials from the two countries said they had reached an agreement in principle resolving a long-running dispute over restrictive practices in Japan's ports. The accord would give U.S. shippers the same access to Japan's ports that the Japanese enjoy in the United States.

U.S. Undersecretary of State Stuart Eizenstat characterized the deal as a "breakthrough which we hope will lead to a meaningful reform of these restrictive, costly and prohibitive port practices."

The dispute heated up Thursday when the Federal Maritime Commission (FMC) announced that it was ordering the Coast Guard and U.S. Customs Bureau to take the unusually severe steps against Japanese container ships.

The ban had been scheduled to take effect at midnight yesterday, but Eizenstat said he expected the maritime commission, an independent regulatory body, to drop its order because of the progress in the talks. Once the order is executed, only President Clinton can overturn it.

An FMC spokesman said the agency was waiting to see details of the agreement before deciding whether to rescind the order.

In Argentina, the last stop on his South American tour, the president issued a statement praising the tentative accord. "We have long pressed Japan for a firm commitment to liberalize trade in its ports, and today they have done just that," Clinton said.

The FMC took the action after it learned that Japan's three largest shipping companies would not pay $4 million in fines. The commission had imposed the penalties last month to force Japan to abandon regulations that hamper U.S. and other foreign shipping lines from moving freely in and out of Japanese ports.

The companies, which carry cargo ranging from apparel to electronics, were prepared to pay the fines, which represented only a fraction of the value of the freight they move each week between the two countries. But the carriers were apparently ordered by the Japanese government not to pay.

By invoking a rarely used section of the Merchant Marine Act of 1920, the FMC pushed the two countries to the edge of a trade war with hundreds of millions of dollars of goods at stake during the approaching holiday season.

Japanese ships carry more than $59 billion worth of goods in containers to U.S. ports annually. Japanese lines would also have been prohibited from moving goods from the United States to Japan.

While the trade dispute has been simmering for years, the commission's surprisingly strong action caught the White House and federal agencies off guard and sent U.S. ports scrambling to determine the potential impact.

The FMC order would have minimal impact in Baltimore. "This port would not be affected because we don't have any Japanese flagged container carriers calling here," Tay Yoshitani, executive director of the Maryland Port Administration, said yesterday.

About a half-dozen Japanese car carriers call at Baltimore each month, but the FMC's order did not apply to the auto ships. Yesterday, the Pegasus Diamond arrived at the Fairfield Toyota Terminal in Southeast Baltimore and unloaded without incident. No other Japanese car carrier is expected for at least a week.

Shipping lines worldwide have long complained that Japanese port regulations require carriers to receive prior approval for even minor changes, such as ship substitutions and schedule changes.

The rules, which often create costly delays for U.S. and other shipping companies, are set by the politically powerful private group representing Japanese stevedores and terminal operators.

The maritime commission took the action against the three Japanese shippers -- Kawasaki Kisen Kaisha Ltd., Nippon Yusen Kaisha Ltd. and Mitsui O.S.K. -- in retaliation. Since Sept. 4, the FMC has been fining the carriers $100,000 per U.S. port call. The first installment on the $4 million in accumulated fines was due Wednesday.

America's two largest shipping lines, CSX Corp.'s Sea-Land and American President Lines, made the complaint to the FMC about Japanese port practices that led to the fines.

Some speculated that the FMC's decisive action was an effort to make its presence felt in a forceful way even as Congress seems poised to eliminate the agency along with several others.

The action was welcomed in some quarters. "If they can negotiate both some of the costs and the difficulty away, that should improve Maryland's prospects in Japan," said James Hughes, director of Maryland's office of international trade.

Key points

The key points in the agreement in principle between the United States and Japan to liberalize Japanese port procedures:

Japan will create an expedited licensing process for U.S. ships entering its ports.

Japan will support an alternative system so that U.S. shippers will be able to negotiate with terminal operators directly without having to go through the Japanese Harbor Transportation Authority. U.S. shippers have long complained about the authority's "prior consultation" process in which shippers must negotiate with the JHTA on everything from ship arrival times to choices of warehouses and stevedore companies.

The Japanese government will use its authority to ensure that the new system is given a fair chance to work.

Associated Press

Pub Date: 10/18/97

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