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Sources: Japan will pay fine in U.S. trade dispute

Port

Talks continue but Tokyo likely to pay shipping fine, sources say

October 17, 1997
Web posted at: 8:59 a.m. EDT (1259 GMT)

In this story:

TOKYO (CNN) -- Japan on Friday called the U.S. decision to bar certain Japanese cargo ships from U.S. ports illegal, but said Tokyo would monitor developments before deciding whether to retaliate. Meanwhile, sources told CNN Japan is likely to pay $4 million in fines, which would be cheaper than the cost of rerouting shipments and delaying deliveries.

In Washington, negotiators from both sides of the trade dispute met late into Thursday night at the Transportation Department before agreeing to resume talks Friday morning.

The ban on Japan's three largest shipping companies was imposed after they failed to meet the deadline for paying the fines, which were imposed by the U.S. Maritime Commission.

The orders were not to be carried out until the end of the day Friday to give negotiators more time to reach a settlement, commission Chairman Howard Creel said.

About 40 container ships from the three companies dock at U.S. ports in an average month, the firms said, and a ban would affect billions of dollars in products hauled back and forth between the world's two biggest economies.

The U.S. complaint

Under orders imposed Thursday by the commission, the U.S. Coast Guard would turn away ships from the three Japanese companies, and the U.S. Customs Service would detain those already in U.S. harbors.

Fuji

"The decision is deplorable and regrettable, coming when we are making last-minute efforts to resolve the dispute," Transport Minister Takao Fujii told a news conference. "The U.S. sanctions were illegal and I urged Washington to withdraw them."

The companies -- Mitsui O.S.K. Lines, Ltd., Kawasaki Kisen Kaisha Ltd. and Nippon Yusen K.K. -- typically carry containers of boxes that can be loaded onto railroad cars, Creel said. Their cargo excludes automobiles, he said, or grain or steel, for example, which usually is shipped in bulk.

Japan denies organized-crime control of its ports

The United States also argues that Japanese ports discriminate against non-Japanese ships and push up costs. The complaint is that Japan requires all shippers to receive prior approval for even the most minor operational changes in handling cargo at its ports.

U.S. negotiators were demanding that these restrictions be eliminated, so American shippers would have the same privileges at Japanese ports that Japanese lines enjoy in the United States.

The Japanese government says the dispute is a private-sector matter, but admits that its port practices are in need of reform and that domestic shippers and exporters are unhappy with the current setup.

The shipping firms argue that the commission's quarrel is not with them but with the Japan Harbor Transport Association, which controls cargo handling.

The port operations are widely thought to be influenced by "yakuza" gangsters.

Fujii denied that the ministry had failed to take stronger action due to fear of the yakuza. "We are not afraid, and there aren't such elements," he said.

Holiday shopping could be affected

The most immediate impact of a ban would be on American retail stores trying to stock their shelves for the upcoming Christmas season. Japanese televisions, radios and other electronic goods could become harder to find if a ban on Japanese ships were imposed, trade analysts said.

President Clinton has the authority to overturn the commission's decision on national security grounds. Presidential spokesman Mike McCurry, traveling with Clinton in Argentina, refused to say whether Clinton would intervene.

Tokyo Bureau Chief John Lewis and Reuters contributed to this report.

 
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