Japan-U.S. Trade Report FAX

In This Issue

Foreign Reaction to Reinstitution of Super 301

Congress Still Pressing Administration on Steel

U.S. Proposes Forum on Bilateral Disputes and Deregulation


Since President Clinton's announcement two weeks ago that he was reinstituting Super 301, foreign reaction to the U.S. revival of this unilateral trade measure has been strong. Super 301 allows, and in some circumstances requires, the imposition of punitive tariffs against the products of nations that the U.S. government unilaterally determines are traded unfairly. The strongest reaction has been from the GOJ and EU, both of whom are presently engaged in various trade disputes with the United States.

The initial GOJ reaction, including Prime Minister Obuchi's statement that Japan would be watching U.S. practices under Super 301 "carefully," has been somewhat more restrained in recent days. In particular, Japanese Ambassador Kunihiko Saito stated last week that it "is not appropriate to take the reinstatement as Washington's attempt to target Japan."

For their part, EU officials have stated that U.S. action under Section 301 would violate various U.S.-WTO obligations. The EU is moving forward on its threat to challenge the mere existence of Section 301 before the WTO. The EU's complaint regarding Section 301 originated as part of the U.S.-EU banana dispute. In that case, USTR published a list of retaliatory tariffs after a WTO panel found EU's import regime to be in violation of WTO rules. The results of the EU's challenge to the U.S. law could have profound implications for U.S. trade policy.

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Japanese steel exports to the United States fell in December. As a result, USTR and other Clinton Administration officials are backing off their threats regarding the need for imminent action against steel imports, such as a Section 201 action.

However, the U.S. steel industry continues to press Congress to seek some form of legislative remedy to protect U.S. steel interests. Rep. Pete Visclosky (D-IN) has introduced a draconian bill that would restrict imports of all foreign steel to a monthly quota for a period of three years. This proposal has only a minimal chance of moving forward through the legislative process, and was most likely intended as a means to maintain pressure on the Clinton Administration to take some action on steel.

We do not expect the Clinton Administration to respond in any significant manner to this legislative initiative. The Administration's strategy behind its "steel plan" (i.e., to allow time for the steel dispute to resolve itself) appears to be working. As long as steel imports continue to fall, the Administration should be able to argue that its "plan" has alleviated the situation and the imposition of any trade remedy against the GOJ is unnecessary.

With regard to steel, we also note recent reports that the GOJ is considering requesting a WTO dispute resolution panel challenging a lawsuit filed by a U.S. steel producer against three Japanese steel importers. This suit, which is based on the U.S. Antidumping Act of 1916, is private legal action available to U.S. companies and is completely distinct from the ongoing dumping proceedings before the Department of Commerce. The GOJ is presently considering whether to challenge this Act on grounds similar to those alleged by the EU in its present WTO panel on the same issue.

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Rumors abound that U.S. and GOJ officials are discussing the possibility of a new framework for regular bilateral meetings to review the present trade deficit and as a forum to address ongoing trade disputes. General issues regarding deregulation of the Japanese economy would also be discussed as part of this forum that would be held at the vice-ministerial level. It is unclear how far discussions have progressed. At different times, various U.S. and Japanese officials have professed ignorance of any such proposal, while other officials have indicated their support for the idea.

Last week, MITI Vice Minister Osamu Watanabe appeared to respond favorably to the U.S. proposal for such bilateral talks. He indicated that while the GOJ has not firmed up its stance on these talks, the GOJ believed regular contact would aid in avoiding potential differences between the two governments. In addition, U.S. Ambassador Thomas Foley indicated the U.S. government was interested in extending the scope of the current deregulation initiative, but was not in favor of creating a new negotiating regime.

In other trade news, the United States continues to criticize the GOJ's decision to impose "astoundingly high" tariffs on rice imports, as characterized by Secretary of Agriculture Daniel Glickman last week. Glickman would not comment on whether the United States intends to challenge the tariff scheme before the WTO, but stated that a joint USTR and Agriculture Department team is presently reviewing the matter.

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Japan - U.S. Trade ReportFAX is published solely for the interest of friends and clients of Paul, Hastings, Janofsky & Walker LLP and should in no way be relied upon or construed as legal advice. For specific information on recent developments or particular factual situations, the opinion of legal counsel should be sought. Paul, Hastings, Janofsky & Walker LLP is a limited liability law partnership including professional corporations.