US-JAPAN TALKS SET FOR 12 JUNE

3:00 PM Jun 2, 1995

US-JAPAN TALKS SET FOR 12 JUNE
Geneva 2 June (Chakravarthi Raghavan) -- The United States appears to have now agreed to hold consultations with Japan over their trade dispute and has suggested the meeting being set for 12 June at Geneva, but with a second meeting after the Halifax Summit.

The US official reply to the Japanese call for consultations under Art XXII of GATT 1994 is yet to be officially conveyed to the Japanese delegation here and to the World Trade Organization and its Dispute Settlement Body (DSB).

But a US official reply agreeing to the talks in Geneva and setting a date is expected to be delivered to the Japanese delegation to the WTO before the weekend.

The Japanese request for talks is addressed specifically in terms of the US announcement of 16 May of a trade sanction of 100% duty on imports of Japanese luxury cars into the US (to be finally determined on 28 June), but with provisional application beginning 20 May in terms of customs withholding liquidation of entries.

The US complaint against Japan, of which it has given "pre-filing notification", but yet to officially formulate a request for consultations with Japan, relates to the Japanese market, and thus wider questions than the unilateral sanctions issue raised by Japan.

The European Union and Australia have requested to join in the consultations, but whether the US would agree remains to be seen.

The US willingness to hold the talks in terms of the WTO was conveyed Friday in Tokyo by US Ambassador Walter Mondale when he met Japan's Trade Minister Ryutaro Hashimoto at the Ministry of International Trade and Industry (MITI).

According to a Kyodo news agency despatch from Tokyo, Mondale proposed in his meeting with Hashimoto that the talks be held on June 12 or 13, and that this should be followed by a second meeting after the Halifax Summit (June 15-17) of the Group of 7 industrialised nations.

Mondale advised the Japanese Minister that the official response would be given in Geneva to the Japanese Mission to the WTO in the next day or two.

The Japanese news agency said that Mondale and Hashimoto informally agreed on the meeting before the Halifax summit and quoted both sides as saying that whether, when and where to hold the subsequent talks would be decided at the end of the first meeting.

But the dispatch said that Hashimoto had accepted the first meeting, thus leaving the impression that the second meeting, sought by the US after the Halifax Summit, is not on the cards at the moment.

Kyodo quoted US officials (in Tokyo) as saying that the Japanese side had indicated that they want more talks but that they do not want to "relegate the first talks to something perfunctory".

The US Trade Representative Mickey Kantor on 26 May had suggested that the Japan-US consultations should be held on 20-21 June in Washington.

But Japan rejected this, insisting on a meeting in Geneva where the WTO is headquartered, and also as soon as possible as a matter of urgency, but any event before the expiry of the 30-day period set for normal consultations.

US officials have been taken aback by the strident criticism from around the world, and even internally, over its unilateral action of trade sanctions -- criticism even from those who like the United States see the Japanese market and its cartelized structure as one inhibiting market entry for others.

Kyodo quoted American officials as acknowledging disagreement over the methods being sought to be used by the US to pry open the Japanese auto and auto-parts market, but that "there is unanimity that this market is closed".

The official was further quoted as saying that the US had a 50-50 chance of prevailing in its case at the WTO, but was confident of winning its own case in the complaint to be brought to the WTO about the closed nature of the Japanese market.

Several reports from Washington, and elsewhere, suggest that the US side is still looking for some compromise from Japan.

Since the dispute erupted into the open, there have been many suggestions (from American columnists and some academics and US lobbyists and business representatives abroad) that Japan would need to take a wider view than the trade issue and find a compromise keeping in minds its overall strategic, defence and other links with the United States.