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Wed, Jul 04, 2001 - Page 21 News List

China and Japan sit down for talks


Chinese and Japanese negotiators finally got down to talks yesterday over a nagging trade dispute after weeks of tough rhetoric between the Asian trading giants.

Senior trade, farm and foreign affairs officials from the two countries sat down in Beijing for what were scheduled as two days of talks, which could be extended if progress is made.

The effort is to end a three-month squabble over Japanese curbs on Chinese farm products and China's subsequent duties on Japanese industrial exports as Beijing enters the final stage of its marathon quest to join the WTO.

Each side has accused each other of breaching WTO rules in a dispute that analysts say underscores the need to get China into the trade governing body. With China outside the WTO, there is no independent referee to rule on which side is right.

China has said consistently it is up to Japan to settle the problem by lifting its restrictions -- prohibitively high duties on imports of Chinese-grown shiitake mushrooms, spring onions and rushes for tatami mats imposed in April.

On June 22, China slapped 100 percent punitive tariffs on imports of Japanese motor vehicles, mobile phones and air conditioners. Beijing did not say these were in retaliation for the Japanese curbs, although they were clearly tit-for-tat.

Both sides are seen as having acted to protect their politically sensitive farmers.

Japan heads for key parliamentary elections this month with its main ruling party traditionally dependent on the farm vote.

China, with 900 million of its 1.3 billion people living in the countryside where living standards have fallen far behind the fast-growing cities and coastal regions, has been racked by rural unrest which Chinese leaders fear could undermine Communist rule.

Japanese Trade Minister Takeo Hiranuma said on Sunday that Japan would not bow to China's demands to remove import curbs on three Chinese farm products.

Tokyo says it imposed the temporary "safeguard" curbs under WTO rules, which preclude retaliation, to protect domestic industries from cheap imports.

In a precedent to China's row with Japan, Beijing responded last year to South Korean tariffs designed to staunch surging imports of Chinese garlic with punishing tariffs on South Korean mobile phones and polyethylene. Seoul backed down.

Economists say the skirmish with Tokyo belies deepening economic integration as Japanese industry moves ever more of its manufacturing operations to low-cost China.

Diplomats say the two have made progress just by getting to the negotiating table.

China had ruled out talks until Japan scrapped its curbs and diplomats said both sets of curbs would be on the table this week despite Japan's insistence they could not be discussed at the same time.

Vice Trade Minister Katsusada Hirose reiterated on Monday that Japan's import curbs on the Chinese farm products met WTO rules and insisted there was no link between the two sets of punitive tariffs and they could not be discussed simultaneously.

The talks began as China and WTO members held high-level discussions in Geneva aimed at getting China into the world trade body before the end of this year.

A week of talks on China's WTO entry are scheduled to end todayday and trade diplomats said they would meet again on July 14 for another push.

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