Brittan raps US over Japan car sanctions

Japan called for urgent talks with the United States and invoked the disputes procedure of the World Trade Organisation after Washington threatened to double the price of imported Japanese luxury cars.

As Tokyo gave the first hints of retaliatory action, Japan appeared to receive support from the European Union trade commissioner, Sir Leon Brittan. He told reporters in Strasbourg yesterday that Washington was breaking world trade rules it had helped to shape.

Yoshihiro Sakamoto, Japan's deputy trade and industry minister, visits the WTO's Geneva headquarters today to muster support against the US.

Yesterday, he gave an unexpectedly angry response to the US sanctions. "There is a possibility we may be forced into retaliatory measures. We have not decided, but it could be a good idea."

America's imposition of 100 per cent tariffs on 13 makes of Japanese cars is a critical test of the World Trade Organisation, created six months ago.

Jun Yokota, a senior Japanese diplomat, delivered its request for talks to the WTO yesterday, giving Washington 10 days to reply. If the US refuses talks, or if further negotiations fail to produce a settlement within 20 days, Japan can ask for adjudication from a WTO disputes panel, which can demand that sanctions be lifted.

The US decision on Tuesday to raise tariffs from 2.5 per cent to 100 per cent will affect $5.9bn (pounds 3.6bn) worth of Japanese luxury cars. It follows two years of unsuccessful bilateral negotiations between the world's two largest trading powers aimed at opening up Japan's car and components market.

Mr Yokota said the sanctions, which go into effect on 28 June, had made an immediate impact on Japanese business. "We therefore see them as already violating US obligations in WTO to refrain from unilateral actions," he said.

Sir Leon said the US risked damaging trade rules it helped to build. "We all want to boost trade in cars, but to jeopardise the WTO's credibility so soon after its creation sends a bad signal," he said.

Emerging Asian economies which also have potential disputes with the US indicatedalarm at the US action, fearing it could undermine protection they hoped they had won in the WTO from strong-arm tactics.

The tariffs could end the challenge to domestic cars from Toyota's Lexus and Honda's Acura Legend, but Japanese manufacturers could increase output at plants in Canada for import to America to get around the tariffs. A US-Canadian trade pact prevents imposition of tariffs.