TRADE ISSUES STRAINING EC'S PATIENCE WITH JAPAN
Member states of the European
Community are starting to run out of patience with Japan which
they believe has repeatedly promised major initiatives to open
its market to imports, but as often made only minor moves.
    Diplomatic sources here said several recent actions by EC
countries bear witness to a new disillusionment with the
willingness, or at least the ability, of the Japanese
government to reduce its massive trade surplus with the EC.
    However, they said an all-out trade war may be far off, as
EC states know they would suffer almost as much as Japan.
    Senior EC diplomats gave a generally favourable reaction to
an EC executive commission proposal under which the EC could
raise tariffs on a range of Japanese products if the U.S.
Carries out a threat to make a similar move on April 17.
    The EC tariffs, which would involve renouncing obligations
entered into with the world trade body GATT, would be designed
to stop a diversion of exports to the EC market from that of
the U.S.
    The diplomats were meeting as Tokyo announced that the EC's
trade deficit with Japan reached a record 2.13 billion dlrs in
March, up from 1.94 billion in February.
    In 1986, Japanese exports to the EC totalled 30.67 billion
dlrs, up 4.5 pct from 1985, while EC exports to Japan fell one
pct to 12.43 billion dlrs.
    In Paris, trade minister Michel Noir said France has
decided to give Japan a taste of its own medicine.
    Burgeoning imports of microwave ovens and of frozen
Coquilles St Jacques will be restricted by a strict application
of French quality standards -- something EC states say often
happens to their own exports entering Japan.
    Britain has threatened to withdraw the licences of Japanese
banks and insurance companies to operate in the City of London,
because the British Cable and Wireless company lost out in
competition for a Japanese telecommucations contract.
    However, British officials in London have said that the
government may have gone too far in implying that it would take
immediate drastic action unless the contract was reopened.
    By contrast, West Germany, with the EC's most successful
economy, has never threatened Tokyo with sanctions, preferring
to rely on firm diplomacy and encouragement of its own
industries to surmount obstacles to export to Japan.
    The EC Commission itself has switched its tactics in recent
years, substituting general calls for action by Japan to open
its market with specific demands for moves in key areas.
    At present, it is, for instance, pressuring Japan to end
allegedly discriminatory taxation of imported wines and
spirits, to ensure EC companies have a chance to win contracts
for the building of a new international airport, and to
simplify certification and safety checks on imported cars.
    EC officials say these tactics yield some benefits, but
often the Japanese announce modifications of their non-tariff
barriers which open the door to imports by only a token amount.
    They stress, however, that any action must be taken by the
EC as a whole to stop beggar-my-neighbour action.
    One of the problems Britain could face if it were to
withdraw licences for Japanese banks would be that the bankers
would be welcomed with open arms in Frankfurt or Amsterdam,
they point out.
 REUTER
