Japan Raises Chinese Import Tariffs At WTO Meeting

by Mary Swire, Tax-News.com, Hong Kong

20 July 2001

Negotiations between the Chinese and Japanese governments over import taxes having ground to a halt, Japan made good on its threat, and raised the subject of the trade dispute at a WTO multilateral negotiation session on China's forthcoming membership of the organisation.

The dispute, which has been ongoing for almost three months now, stems from the Japanese imposition of a 'safeguard mechanism', namely the increase of import tariffs on Chinese farm imports. The Chinese government responded angrily to this by imposing punitive tariffs on Japanese cars, mobile phones, and air-conditioning units, and although preliminary talks did take place, neither country is willing to budge, and the situation remains deadlocked.

The Japanese envoy to the WTO meeting this week told the assembled representatives that his country's actions were in keeping with the international trade organisation's rules, whereas the Chinese retaliatory blow was not, as the WTO stipulates that reprisals against a 'safeguard measure' can only take place after said measure has been in place for three years. He also hinted that the Chinese position with regard to its forthcoming membership was ambiguous, and that the government had responded to Japanese pleas by stating that as China is not yet a member of the World Trade Organisation, it does not have to abide by its rules.

Although the matter has now been raised, it remains to be seen whether the Japanese government will stand by its earlier promise not to oppose China's entry to the free trade organisation.

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