Protectionists spar with free traders in safeguard spat

Masayashi Kanabayashi

The struggle between protectionists and free traders is intensifying in Japan. In late April, the government invoked import safeguards—a combination of quotas and duties—under World Trade Organisation rules against some agricultural products, mainly from China. The move came after pressure from Japanese farmers, who complained that the products were flooding the market and forcing prices down. Yet the move has encouraged other industries to follow suit. Indeed, this growing protectionist sentiment has also put free traders on alert.

An advisory body of the country’s trade minister warned in early May that protectionism isn’t in Japan’s interests and called for stringent screening of any applications for importation safeguard protections. “Safeguard steps should be invoked (only) if there are prospects that the industry will be able to restore international competitiveness, while the step is in effect, or domestic adjustment in the industry will be carried out,” said a statement issued by the Industrial Structure Council, an advisory body to Japan’s trade minister.

The council, expressing strong opposition to trade-restrictions that are too easily imposed, also stressed that Japan “is one of the countries that is benefiting the most from a free-trade system, and the further promotion and strengthening of this system is the basic policy line of our country.”

Heizo Takenaka, minister of state for economic and fiscal policy, has urged that the Ministry of Agriculture, Fisheries and Forestry apply strict scrutiny to applications for safeguards. At a recent lecture to Japanese agriculture ministry officials, Mr Takenaka likened the import safeguards to lending fresh money to dead-beat companies, according to Japanese news reports.

Concern is rising over the increasing protectionist sentiment in the private sector, too. The Nihon Keizai newspaper, Japan’s leading economic daily, for example, argued in a recent editorial that if Japan is seen as leaning toward protectionism, it may impede the progress of discussions over a free-trade agreement for Asia, which the Japanese government is considering initiating.

Last month, Japan invoked import safeguards against Chinese-grown leeks and mushrooms, as well as rushes, which are used to make tatami mats, marking the first time the country has used the WTO safeguards clause. Towel makers and necktie producers called for safeguards against imports from China earlier this year.

Now, Japan’s bicycle makers say they too are victims of a surge in imports from China. In mid-May, they confirmed reports that they will seek government protection from imports. “If the situation is left unchecked, the existence of domestic producers would be jeopardised,” says Toyokazu Kawaguchi, a spokesman for the Bicycle Association (Japan).

According to the bicycle association, national sales have stagnated at less than 10 million bicycles a year in recent years, but Japan’s bicycle imports have been rising sharply, with China rolling into the lead. Japan exported more than one million bikes a year in late 1960s and early 1970s, but sells almost none overseas today.

The price of Chinese-made bicycles is the big attraction. Supermarket chains and other retailers often use them as loss leaders, selling them for less than 10,000 yen ($83). Bicycles made in Japan often cost 20,000 yen or more.

The Bicycle Association will ask the Ministry of Economy, Trade and Industry to invoke bike-import safeguards as soon as it finishes compiling data to be submitted to the government agency, the spokesman said. He declined to specify when that might happen.

(The Asian Wall Street Journal)