China and the WTO by Petros C. Mavroidis

Author:Petros C. Mavroidis [Mavroidis, Petros C.]
Language: eng
Format: epub
ISBN: 9780691206592
Publisher: PrincetonUP
Published: 2020-10-28T00:00:00+00:00

Japan Inc. became Japan’s de facto name in trade circles. Through this sobriquet (or nom de guerre, depending on the perspective), its trading partners wanted to denote that private agents played second fiddle to idiosyncratic (if not whimsical, echoing folie de grandeur) aspirations of the Japanese government to dominate international economic relations. Japan’s trading partners adopted both multilateral and bilateral measures to try to change Japan’s practices.

Multilateral Measures

The United States, Canada, and the EU litigated what was allowed under the GATT multilateral rules. Japan was a defendant in nine cases that reached formal adjudication between the time of its accession in 1955 and 1994, before the advent of the WTO. The cases (listed in chronological order) are: Japan–Silk Yarn (United States, 10/25/1977), Japan–Leather I (US) (United States, 7/19/1978), Japan–Leather (Canada) (Canada, 10/26/1979), Japan–Tobacco (United States, 11/7/1979), Japan–Leather II (US) (United States, 2/24/1983), Japan–Agricultural Products (United States, 8/12/1986), Japan–Alcoholic Beverages (European Community, 10/31/1986), Japan–Semi-Conductors (European Community, 2/19/1987), and Japan–SPF Dimension Lumber (Canada, 3/19/1988).44 Japan prevailed only once (SPF Dimension Lumber) and implemented all reports where its measures were found to be inconsistent with the GATT. Actually, it formally adopted only six reports, since twice (in Silk Yarn and Tobacco) it settled with the complainant (the United States) before the report was issued. The two instances where Japan settled concerned state-trading enterprises having a monopoly over the import of silk yarn and tobacco. Note also that seven of the eight cases lost by Japan concerned its import regime. The other case concerned its export prices for semiconductors, where the European Community (EC), as the European Union was then called, acted as complainant.

The complaints about Japan, as is the case with complaints against China, also demonstrated the limits of what can be done against countries with heavy state involvement in the economy within the four corners of the world trading regime. In a communication to the GATT membership in 1983, the EC complained about what it viewed as “a serious problem: the difficulty of penetrating the Japanese market.” It requested the establishment of a Working Party under Article XXIII:2 of the GATT (Nullification and Impairment), on the basis that “benefits of successive GATT negotiations with Japan have not been realized owing to a series of factors peculiar to the Japanese economy which have resulted in a lower level of imports, especially of manufactured products, as compared with other industrial countries.”45 While acknowledging that Japan had recently taken some measures to alleviate the situation, the EC noted that “the impact of these measures as a whole is limited and not commensurate with the magnitude of the problem.” Consequently, the EC demanded

a solution … which requires a co-ordinated series of general and specific measures, which go beyond the formal barriers at the border, and which are designed to bring about a definitive and substantial improvement in the present situation. In this context, the European Community reiterates that it is not seeking a fundamental change in the Japanese socio-economic system. It is interested in results: a

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