US set to bar Japanese ships from ports

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A trade dispute has been simmering for months between Japan and the US. But the order yesterday for the US Coast Guard and Customs Service to prevent Japanese ships docking in US ports, has upped the ante, writes Mary Dejevsky.

The origins of the dispute lie in access and unloading procedures at Japanese ports for American ships. Six weeks ago, in frustration at what it regarded as insufficient progress in opening up Japanese ports, the American side announced that it was levying fines on Japanese ships using US port facilities. To date, Japanese ships have run up a bill of $4m.

On Wednesday, the deadline for paying the fines, the Japanese shipping companies concerned reportedly informed the agency responsible for collecting the fines - the US|Maritime Commission - that they had no intention of paying. Yesterday's order to the Coast Guard is the US response, one that caused the dollar to fall by more than 1.5 yen, its biggest drop against the Japanese currency for five weeks.

The Japanese view is that because diplomatic talks were still in progress, there was no obligation to pay the fine. A spokesman for the Maritime Commission, however, said: "payment was due midnight Wednesday, and a deadline is a deadline".

The United States has spearheaded foreign complaints about Japanese port practices since the early Eighties. Japanese port charges are regarded as extremely high and procedures unnecessarily rigid - a reflection of long-standing restrictive practices.

Among the specific complaints is the requirement that foreign shipping companies obtain advance clearance even for what US shipping companies regard as minor changes to an operating schedule.

Earlier this year, the American side believed it had made progress, with undertakings from the Japanese that this, at least would change. American companies, however, experienced no improvement and from 4 September the US said it would impose sanctions - the first to be levied on Japan for 10 years. Any Japanese cargo vessel entering a US port would have to pay a fine of $100,000. The first payments fell due on Wednesday.

The fact that the order has been stayed for 24 hours, until the Coast Guard and Customs Service receive written notification, coupled with the fact that talks are still in progress, suggest a considerable element of brinkmanship in yesterday's announcement. There is also the possibility that the order could be reversed by President Clinton. It may be no coincidence either that the order came on the eve of the latest round of US-Japanese talks on aviation, as US airline companies, led by Northwest, complained that the US was planning a deal with Japan that sold US companies short and fell way below the original aim of "open skies" between the two countries.