Japan presses case for levy exemptions

Views differ on effect of US tariffs but specter of past trade war looms large

Though Japan is not exempted from US President Donald Trump's new tariffs on steel and aluminum imports, the Japanese government and steel industry have responded with restraint.

Several Japanese ministers called the measures "regrettable" on March 23 when the tariffs of 25 percent on steel imports and 10 percent on imported aluminum went into effect.

Prime Minister Shinzo Abe will visit Washington in mid-April to ask for an exemption, while Trade Minister Hiroshige Seko said Japan will continue to "patiently" press its case.

The Trump administration has granted initial exemptions to the European Union and other allies. The EU threatened countermeasures if its steel and aluminum are on the list.

Some Japanese officials and experts believe the new tariffs will have limited impact on Japanese companies.

Japan exported about 1.9 million tons of steel products to the United States in 2017, about 2 percent of Japan's total crude steel production that stood at some 100 million tons.

Japanese officials and scholars say their country's high-quality products, such as steel stock for railway tracks or automobile bodies and pipes for oilfield development, are irreplaceable in the US market.

But some economists believe that as the US reduces steel and aluminum imports, the supply to the world market will increase and steel prices will decline. Even if Japan were exempted from the new tariffs, Japanese steel industry would suffer a great loss.

At the ruling Liberal Democratic Party's annual conference on March 25, Sadayuki Sakakibara, chairman of Japan Business Federation, or Keidanren, said he is concerned that the Trump administration's protectionist policy could lead to a trade war.

The US side argues that the import of cheap steel is pushing its military-related industries toward decline, and therefore putting US national security at risk. The World Trade Organization, however, recognizes such an argument only in limited cases, such as when a country is in the midst of a military contingency.

Political purposes

The Mainichi Shimbun called the US new tariffs "an extremely unusual ultra-protectionist policy" for political purposes. Using his heavy-handed trade policy as a threat, Trump is intent on producing results ahead of midterm elections in November.

"There's a possibility that the US, in exchange, will demand market-opening measures and increases in military spending," the newspaper's editorial said.

"This puts the US at an advantage when it comes to bilateral negotiations because of its overwhelming economic and military power."

The newspaper called on the US, which is supposed to be a world leader, to solve disputes according to WTO protocol and take the responsibility to initiate and foster global collaboration.

The aluminum market is responding to the Trump administration's trade policy.

Global mining giants are pushing for higher premiums on aluminum ingots from Japanese buyers for next quarter as the prospect of the US restrictions on imports has spurred demand, according to the Nikkei Asian Review.

Companies such as Anglo-Australian player Rio Tinto and Alcoa of the US seek $132 to $135 a ton for the April-June period, up 30 percent from the first quarter of the year.

Shipments to the US started picking up in January when Washington began seriously weighing measures to reduce aluminum imports. Premiums for the US market rose as well, the magazine said.

Trump's unilateral invoking of Section 301 of the Trade Act of 1974 for China's so-called violations of US intellectual property rights remind many Japanese experts of US highhandedness over trade with Japan from the 1960s through the 1980s. Washington highlighted its trade deficit when it pushed Japan to open up its market for products such as textiles, steel, televisions and machine tools.

The friction between the two countries was resolved through high tariffs on the US side and voluntary export restrictions on the Japanese side.

The Nikkei Shimbun said the decline of Japan's semiconductor manufacturing was partly due to US pressure at the time.

caihong@chinadaily.com.cn

(China Daily 03/29/2018 page11)