Sanctions fear after US-Japan automotive trade talks fail

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The threat of a trade war between the US and Japan looms larger today following the weekend breakdown of bilateral talks on automotive exports. Japan's trade and industry minister Ryutaro Hashimoto said that Japan would appeal to the World Trade Organisation to counter any U.S. trade sanctions.

Despite the breakdown, he said Japan would continue its own efforts to expand opportunities for foreign car and components makers to sell their products in Japan, including government funding for foreign car showrooms in Japan's major cities.

The WTO has recently replaced GATT as the regulatory body for international trade. Its dispute procedure, involving a panel of "wise men" to investigate and recommend solutions, will be triggered if the two sides fail to reach agreement within the next 60 days.

Meanwhile in Washington, US Trade Representative Mickey Kantor was scheduled to meet President Clinton last night with plans for a package of sanctions. These included 100 percent punitive tariffs on billions of dollars worth of Japanese imports. Automotive industry imports, including luxury cars and auto parts, were expected to be the main focus of US action.

In the year to March, Japan's overall trade surplus with the US was $56.66bn, of which the automotive industry accounted for $36.7bn. AP, Reuters