Prime Minister Morihiro Hosokawa warned the United States on Saturday against imposing trade sanctions on Japan after their failed negotiations.
His top aides said such action would cause Tokyo to retaliate with sanctions on U.S. products.
“I very much hope the U.S. will refrain from such action,” Hosokawa told reporters before leaving Washington, a day after the eight-month-long trade negotiations between the United States and Japan collapsed.
With American officials already vowing to impose some sort of punitive measure on Japan, now that Japan has refused to accept American demands for more open markets, the world’s two biggest economies appeared to be poised on the edge of a trade war.
But there undoubtedly is a lot of posturing going on with the respective warnings, as both sides try to look tough for their domestic audiences.
Hosokawa sounded a polite but very firm warning to his American hosts at his Saturday morning news conference, which followed a breakfast at the White House with President Clinton.
He said that under no conditions would Tokyo drop its resistance to “numerical targets” for opening Japanese markets, the key stumbling block in the negotiations.
The Americans insist that Japan agree to certain numerical indicators that will prove whether it is opening its markets in autos, telecommunications, insurance and medical equipment.
The Japanese refuse to accept such indicators, saying that would constitute “managed trade.”
“We will not modify our position in that regard,” Hosokawa bluntly told reporters.
Asked about reports that the U.S. was considering unilateral trade sanctions on Japan to pry open closed markets, Hosokawa not only said he hoped that the United States would refrain from such a move, but also pointed out that “that would be a contravention of GATT,” the General Agreement on Tariffs and Trade.
He left the clear indication, amplified by some of his aides, that Japan would respond to any attempt by the United States to slap tariffs on Japanese imports by taking the United States to a GATT tribunal, or by imposing its own unilateral sanctions.
Japan has threatened to take the United States to a GATT tribunal for some 20 years each time the U.S. threatened or took unilateral trade action. But Japan has never followed through out of fear of triggering a broader trade war.
Under GATT rules, a country that believes its exports are being restricted in violation of the agreement’s free-trade rules may ask that a panel of three experts from countries not involved in the dispute be convened in Geneva. The panel reviews legal arguments by both sides before ruling. The ruling gives moral authority to the complaining country to impose trade sanctions.
The United States, however, has not always complied with GATT panel rulings against it, and the Japanese threat does not instill real fear in American negotiators.
