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Japan holds off on retaliation over US steel tariffs

In a temporary victory for the US steel industry, Japan said yesterday it would delay slapping US imports with 100 percent tariffs in a bid to ease the growing steel row with its biggest trade partner.

Japanese retaliatory measures were set to kick in June 18. But Trade Minister Takeo Hiranuma called off the plan after a morning phone call with US Trade Representative Robert Zoellick, a ministry official said.

Japan had threatened retaliation if the US failed to exclude Japanese products from safeguard tariffs levied in March by President George W. Bush.

Zoellick said the US was considering Japan's request to be either excluded from the US tariffs or otherwise compensated for damage to its steel industry.

"Minister Hiranuma got the impression that the United States is constructively reviewing our priorities. I should not say `positively' yet, but 'constructively,'" the trade ministry official said on condition of anonymity.

Hiranuma decided on the delay to smooth ongoing negotiations. The trade official said there was no timeline for dropping the threat.

"He thought it would be mutually beneficial to continue talks between the two countries," he said.

Two possible solutions include the US excluding Japan from steel tariffs, or the US lowering tariffs on other Japanese goods.

According to the official, the US is expected to announce more products exempt from US tariffs as early as next week. He declined to say how optimistic Japan was that some of its own products would be among them.

On Friday, the US Commerce Department announced it would exempt 61, mostly European, products. They amount to about only 1 percent of the 11.79 million tonnes of steel imports covered by Bush's protective tariffs.

Bush has set a deadline of July 3 for decisions on an initial group of 470 exemption requests.

Japan's retaliatory measures would slap imports of US steel and steel products with 100 percent tariffs of US$4.88 million. Another US$118.55 million in penalties could be applied, if the WTO decides that the US levies violate the trade body's rules.

The US began imposing tariffs of up to 30 percent on steel products on March 20, using a section of global trade rules that allows for temporary tariffs.
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