7:11 AM Jul 12, 1995

JAPAN WARNS AGAINST NEW US S.301 MOVES

Geneva 12 July (Chakravarthi Raghavan) -- Japan warned Tuesday in the General Council of the World Trade Organization against the US moves starting a process under S.301 of US domestic trade law over the questions of Japanese market and access to it for the US photographic film supplier, Kodak.

Japan's ambassador, Minoru Endo, raised the issue under any other business at the WTO General Council and told the meeting that such an investigation would lead to unilateral trade measures and these would be violative of the WTO rules and unacceptable to Japan.

The US Trade Representative, Mickey Kantor, has announced that Kodak film company's complaint has been taken in hand and the USTR would start investigations.

The USTR's call to Japan to negotiate has been refused by Japan, whose Ministry of International Trade and Industry, said it would not negotiate under S.301 and the threats of sanctions.

Endo said that the US policy (of taking up S.301 investigations) was not consistent with the spirit of the WTO Agreement prohibiting unilateral measures.

Earlier, also under other business, in a statement from a prepared text (which the WTO press office declined to provide to the media, referring everyone to the Japanese delegation) Japan advised the Council of the agreement reached with the US in the trade dispute on the auto- and auto-parts trade and the auto dealerships.

The Japan-US talks under the WTO related to the US-imposed unilateral sanctions, and did not get very far. The substantive talks, though held in Geneva, were outside the WTO framework, and in terms of the US-Japan framework agreement.

Neither Japan nor the US have so far notified the WTO formally of the terms of their agreement or provided any copy.

While the US did not speak or make any comment, Japan, as well as others who spoke (EU, Australia and Hong Kong) suggested that the resolution of the dispute showed the WTO system could contribute to the resolution of the disputes. The WTO head, Renato Ruggiero, had made similar claims immediately after the US-Japan announcements of accord.

Ironically though, media reports from Washington (after the WTO General Council meeting) suggested that the US and Japan are having problem in translating their Geneva accords into writing, and that there were serious differences on one of the issues relating to qualitative and quantitative criteria.

The reports said that the United States could still come back to the WTO over its complaint over the cartelization of the Japanese market, as well as probably trade sanctions and actions, if the two sides are unable to reach an accord on what they agreed to in Geneva, and which would enable the US to track progress in the market opening for its autos and auto-parts in the Japanese market.

In outlining to the WTO General Council, the two "joint announcements" on dealerships and autos and auto-parts, Japan expressed its satisfaction that while "objective criteria" had been set on the auto- and auto-parts trade, and provisions for annual consultations between the two governments on the assessment of implementation of the measures and evaluation of progress based on qualitative and quantitative criteria, there were no numerical targets involved to commit the future outcome.

Japan told the Council that it welcomed the outcome of the talks (and withdrawal of its own complaint against US unilateral measures) and that the outcome confirmed the position of Japan that the issue of numerical targets was outside the scope of the role and responsibility of government.

Japan said the fact that such a difficult trade dispute could have been settled "in conformity" with the WTO rules signified a "victory" for the newly created WTO and that Japan felt it was meaningful to have had the talks in Geneva, which symbolised the multilateral trading system. The Japanese government was hopeful that this conclusion would help multiply import opportunities to the Japanese market for trading partners and reiterated the policy of contributing to this through further deregulation and improvement of market access.

The United States itself made no comment or response,

Among others, the EU expressed satisfaction with the solution to the dispute and this showed the WTO provided a framework for resolving trade disputes and that its process should be used, even if it was not pursued to the end. The EU wanted the terms of the agreements to be provided to the WTO for the sake of transparency.

Australia, which was involved in the Japan-US WTO consultations (but not the outside bilateral framework talks) was also happy with the outcome, but wanted the agreement to be examined to ensure that there was no prejudice to other producers and exporters. It also suggested that the resolution of the dispute showed that the WTO system could make a constructive contribution to the settlement of disputes.

Hong Kong also made a similar point, adding further that it was happy that no numerical targets, which would have been the first step towards managed trade, had been set or agreed upon.