Japan declares US trade war

[cal04]

JAPAN will impose its first-ever retaliatory trade sanctions against the US on 15 goods including steel over a controversial US anti-dumping law, the trade ministry said today.Japan is the latest major US trading partner to impose sanctions to protest the US anti-dumping law.The Japanese tariffs, set at 15 per cent from September 1, are in line with similar moves by Canada and the European Union against the so-called Byrd Amendment.The law enacted in 2000 redistributes US levies on dumping -- the selling of items abroad at lower prices than in the domestic market -- to the US companies that complained. Critics says this puts exporters to the United States at a disadvantage.

Trade Minister Shoichi Nakagawa said Japan had "been urging the US repeatedly to abolish this amendment to avoid the countermeasures but we see an extremely low possibility that it will be abolished in the (US) current fiscal year" which ends in September 2005.

"We hope strongly that the US will take this decision by Japan seriously and scrap the Byrd Amendment immediately," Nakagawa said.It is the first known time that Japan, whose economy is built on exports, has imposed retaliatory sanctions on a country.The goods subject to punitive tariffs include steel products, machinery parts, printing machines, forklift trucks and industrial belts.With the retaliatory measures, Japan's imports from the United States could fall by up to $US52.1 million ($68.6 million) a year, the ceiling approved by the World Trade Organization (WTO), the ministry said.

The Japanese government decided to act against the law, named for US Senator Robert Byrd, after approval by its Council on Customs, Tariff, Foreign Exchange and Other Transactions.Japan and other six other countries -- Brazil, Canada, Chile, India, Mexico and South Korea -- as well as the EU took the issue to the WTO, which last year authorized sanctions amounting to 72 per cent of the sums reaped by the US law.Japan is one of the closest political allies of the United States but the two countries have a number of trade disputes.

http://www.theaustralian.news.com.au/common/story_page/0,5744,16114783%255E1702,00.html

[loudsue]

1. Wow. This is going to cause some heavy repercussions.

Don't the Japanese know that the mafia is running this country? You don't just go around protecting yourself from them! They won't put up with it!

:kick::kick::kick:

[cascadiance]

2. We dump subsidized corn syrup-based products on South America too...

So we shouldn't be one to complain that Japan is the only country that "dumps" products on others' markets. The dumping of federally subsidized corn syrup based sugar products has put out of business many poor South American farmers when their sugar cane-based sugar can't compete on price.

Then what results is:
1) Many of these farmers have to sell their farms at a dirt cheap loss to either American company interests or the elite government interests that let the U.S. import stuff into the country in this fashion to begin with. The result is that the haves scoop up a lot of cheap land, and the have nots lose a lot of it and wind up having to rent, etc.
2) These former farmers, without their older farm businesses to make money are forced to now work dirt cheap in U.S. and other countries' factories that pop up there where they outsource American jobs to that much more cheaply, since these people are desperate for work.

The haves win everything above, and the have nots lose everything. See how the shakedown is happening?

Japan is now saying, hey, why should we pay penalties for dumping on your markets, when you don't pay anything when doing the same in South American markets.

[idlisambar]

5. not really

Japan is now saying, hey, why should we pay penalties for dumping on your markets, when you don't pay anything when doing the same in South American markets.

Japanese policy-makers probably couldn't be less concerned about dumping in the South American sugar market. The difference between the US and Japan when it comes to predatory pricing is that in the U.S. it is done in an ad hoc fashion -- some company receives a subsidy to support the dumping as a political favor. In Japan, dumping is a business strategy that is supported as a matter of national policy, not just to satisfy interest groups.

[cascadiance]

6. Au contraire... I think more groups are involved with U.S. dumping!

The Japanese were mostly dumping chips to "take over" the chip market, and one could argue that they might have been less "subsidized" doing so, though perhaps they have less anti-trust laws that prevent certain companies from doing so.

In the case of the U.S., not only do U.S. companies making sugar, etc. profit from this exercise, but other entities in the target countries (the well off that help make laws there), and various other U.S. companies that also profit from getting cheap land and cheap labor as a result of putting those farmers out of business, and our taxpayers foot the bill for the dumping. I'm guessing there's a lot more hidden collusion involved in the case of U.S. dumping activities, even though it might only be "showing" that a few such products get dumped.

[idlisambar]

8. not seeing the contradiction

my point was that when Japan dumps it is usually in the national interest rather than to advance special interest groups or some political constituency. Generally Japanese firms under the guidance of their bureaucrats are much more effective in utilizing predatory pricing as a business strategy.

In general, "dumping" as a concept is actually pretty ambiguous. China is in effect "dumping" across all of their industries by intentionally keeping their currency undervalued (as are Japan, Korea, and others).

One other note, the dispute concerning the Byrd amendment is not with the legality of punishing for dumping (which is well established), but rather whether the penalties can be transfered to the companies that were hurt by the dumping or to general government revenues.

[K-W]

9. You are drawing a false destinction.

"my point was that when Japan dumps it is usually in the national interest rather than to advance special interest groups or some political constituency."

In both the US and Japan, the interests of the business community are seen as national interests and are the primary constituency of the government. The US dumps for exactly the same reason as Japan.

[idlisambar]

12. there is a true (and important) distinction

It arises from differences between the US and Japanese power structure. In the US the government is subservient to business interests and special political interests, while in Japan it is the other way around.

Neither in Japan or the U.S. are all business interests served equally, the criteria for support and the degree are different in each.
The U.S. government tends to provide support for industries that have nothing in common other than outsized political influence such as agriculture (because of the outsized influence of the rural states), pharmaceuticals and financial services (because of their outsized profits and political contributions). The Japanese bureaucrats meanwhile tend to offer support to industries with strong export prospects, usually in manufacturing, such as autos, electronics, and steel.

[donsu]

3. Japan is not buying our mad cow beef either

nt

[anotherdrew]

4. we subsidize every major business in this country... by not taxing them

or taxing them very little. One of these days someones gonna bring that to the WTO.

[cascadiance]

7. They already have with stuff like the steel industry tarriffs, etc.

where the WTO threatened sanctions and penalties if the U.S. continued to prop up our embattled steel industry with tarriffs and the like. It's happened in other areas too.

[Deja Q]

10. Red alert! All hands to battle stations!

Pity the US economy isn't based on exports...

[Chicago Democrat]

11. Dollar alert! Watch for retaliatory selling of Japanese owned T-Bills

maybe.. if gets much worse.