Tokyo may counter U.S. steel tariffs

Japan weighs joining long line of nations pondering retaliation

April 12, 2002|By BLOOMBERG NEWS

TOKYO - Japan said yesterday that it may retaliate against the United States for tariffs on steel imports, escalating a trade dispute that's embroiled the world's biggest economies.

Takeo Hiranuma, Japan's Minister for Trade and Industry, threatened to retaliate against the tariffs unless Japan is compensated for lost markets through the World Trade Organization.

Japan is mired in its 17th month of recession and under pressure to defend its exports. A drop in steel prices to 20-year lows saddled its top five steel- makers with losses of 244 billion yen ($1.9 billion) in the fiscal year that ended March 31. The new U.S. tariffs run as high as 30 percent, further threatening the steel companies.

"We asked the U.S. to end the steel tariffs because there hasn't been any sharp rise in steel imports" in the United States, said Hidehiko Nishiyama, a trade official who attended talks with U.S. Trade Representative Robert B. Zoellick. "We couldn't get a concrete response from the U.S. on compensation." He didn't specify what action Japan may take.

Japan's threats of retaliation follow the lead of the European Union. The EU plans $2.2 billion in tariffs on U.S. products from textiles to fruit. Altogether, 10 governments have now lodged complaints against the U.S. measures at the WTO in a dispute that is spiraling into a global series of retaliatory restrictions and threats.

"There is strong demand for steel to be used to make products for export to the U.S.," said Yoshio Ishikawa, a vice president of NKK Corp., Japan's second-biggest steelmaker. "The greatest victim of the U.S. safeguards will be users in the U.S., who've seen a rise in prices."

In addition to the EU and Japan, these other countries met with U.S. officials yesterday at the WTO in Geneva to discuss their complaints: China, South Korea, Canada, Switzerland, Norway, Mexico, Venezuela and New Zealand.

The talks, which were scheduled to resume today, didn't satisfy critics of the U.S. tariffs, an EU official told reporters after the meeting. The official said the European Commission, the EU's administrative arm, is still preparing a list of retaliatory sanctions against U.S. imports.

Taiwan announced its own controls on imported steel starting Monday to stop foreign steel makers from flooding the island with low-priced products. Malaysia and Indonesia have announced import restrictions in response to the U.S. tariffs.

The U.S. safeguards "are temporary, they will phase down," Zoellick said after talks with Hiranuma in Tokyo. "We expect our industry to use this period to restructure and become more competitive."

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