Chinese experts urge negotiations to avoid China-Japan trade war
(9 March 2001) Japanese business has been calling for higher tariffs and import restrictions against China following recent allegations that Chinese imports have been overwhelming the Japanese market. However, some China experts believe that any trade conflicts between the two countries can be solved through negotiations, since the countries’ trade structures are potentially symbiotic.
Japanese officials visited Beijing from Feb. 18 to Feb. 21 to hold discussions with the Ministry of Foreign Trade and Economic Cooperation. Sources said that the Japanese side was not willing to take action unilaterally and hoped that the Chinese ministry would work toward the solution of the issue, according to the Feb. 27 Zhonghua Gongshang Shibao (China Business Times).
Professor Zhao Jinping, a specialist in Chinese-Japanese trade with the Development Research Center of the State Council, said that the overall trade picture must be considered because the trade issue is greater than any single product area.
"Keep in mind most economists don’t support the notion of dumping," Edward Lincoln, senior fellow at the Washington, D.C.-based Brookings Institution’s Foreign Policy Studies program, told ChinaOnline.
Cases that allegedly involve dumping—defined as the selling of a product in a foreign market at a price lower than the domestic price—usually just consist of domestic industries upset about the threat of imports, something most scholars "just consider . . . good competition," Lincoln said.
China-Japan trade
Statistics have shown that China and Japan are complementary in trade. China has the advantage of an abundant labor force and therefore has a favorable balance of trade in labor-intensive areas such as textile and farm produce. But Japan obviously holds a superior position in its exports of electronic and mechanical products to China, the article noted.
However, statistics on long-term trade between China and Japan indicate that China has had more years of a trade deficit than Japan. In fact, for the past seven years, Japan has been the country from which China has imported the most products. If Japan sets limits on its import of Chinese products, the situation will be unfair to China, according to the Zhonghua Gongshang Shibao.
Additionally, most Japanese-funded businesses in China are distributed within the textile and agriculture sectors, with their products being mainly sold back in Japan. Therefore, Japan’s competition is actually between domestic Japanese enterprises and those in China. Hence, it would be difficult to determine who should be held responsible for the blow to domestic Japanese industries.
Zhao said that Japan should strengthen its talks and negotiations with relevant Chinese departments instead of resorting to hasty measures such as raising tariffs or limiting imports. As for China’s part, the country could standardize the market, increase the planning of these sectors and practice an export quota system, the article said.
David Arase, associate professor of politics and coordinator of the International Relations Program at Pomona College, agreed that one possibility is for China to implement a voluntary export restraint agreement.
However, he told ChinaOnline, it is possible that China may want to take this issue up with the World Trade Organization.
"The WTO forbids a country like Japan against using discriminatory policies," Arase said. But the "basic problem is that China is not a WTO member, and therefore there is no international body who can ride herd over" the problem.
Yet, once the country joins, it could appeal to the WTO and win in a matter of six months, he noted.
One problem industry: Towels
Japan’s towel manufacturers recently applied to their Ministry of International Trade and Industry for adoption of emergency import limits on Chinese towel products. Their argument is that Chinese towel products have taken up more than 60 percent of Japan’s market, driving Japan’s small and medium-size towel manufacturers into bankruptcy.
According to statistics, China’s textile exports to Japan in 2000 totaled 1.8 trillion yen (US$15.37 billion), up 20.7 percent over the previous year. But statistics from the Japan External Trade Organization (JETRO) show that Japan also had an increased market demand for fiber products; consequently, its trade with China as a commission producer had expanded.
Yasuji Komiyama, second secretary at the economics section of the Embassy of Japan in Washington, D.C., told ChinaOnline that a petition was issued by the towel industry on Feb. 26. However, he said it would take a long time to determine whether the worries are valid.
"It’s a very long procedure," he said. It will take approximately two months to determine whether investigations into Chinese imports should even take place. Then, if they are approved, the investigations will take another six months, Komiyama noted.
Although he could not comment on whether the claims are justified, he said Japan was "always concerned about free trade [and] the responsibility to cherish the world free trade system."
According to Lincoln, it is true that a "fair amount of textiles come from Japan-owned or financed businesses in China."
Moreover, he said it is interesting that Japan’s textile industry wants its government to invoke dumping duties, which Japan has rarely, if ever, used.
"In fact, they’ve complained against U.S. dumping duties," Lincoln noted, so "it’s rather ironic for Japan to turn around and tell China" they plan on imposing such policies.
Another problem industry: Vegetables
Several weeks ago, Japan’s farmers also urged the Ministry of Agriculture, Forestry and Fisheries to levy emergency high tariffs on imported Chinese vegetables. Their reason was that Chinese vegetable imports had dealt a blow to Japan’s agriculture industry.
In 1998, Japan suffered from poor crops and imported farm produce, including vegetables, from China as emergency measures. Since then, Chinese farm products have entered Japan and captured 40 percent of its market. In 2000, China’s food export to Japan grew by 6.2 percent to reach 635.1 billion yen (US$5.42 billion), the article said.
According to Yoichi Watanabe, first secretary for agriculture at the Embassy of Japan in Washington, D.C., there are three agricultural items currently under investigation, large amounts of which come from China. They include a kind of mushroom, green onion and a plant used to make tatami mats.
The investigations "are not targeting China specifically," Watanabe told ChinaOnline. However, he did say that the concerns of the industry seem valid, since "imports of vegetables from China, especially hard [ones] like onions, mushrooms or garlic, are increasingly imported into Japan."
Lincoln noted that in Japan, "the agricultural ministry is extremely supportive of farmers" and may be willing to rein in imports to protect the sector.
Similarly, Arase said, "It is not surprising, given the political strength of farmers in Japan. This is going to be a real hard one to resolve."
Overall, Arase added, there is "not a huge difference in the trade balance." Rather, it seems to be "symbolic issues" at the heart of the disputes.
Anita Narayan from ChinaOnline News contributed to this story.
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