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Friday, 21 December, 2001, 07:25 GMT
Japan and China settle trade row
Chinese mobile phone shop
China has dropped its tariffs on Japanese mobiles
China and Japan have agreed to end a damaging eight-month long trade row over mushrooms, onions and rushes, on the day the taxes which started the dispute were to be extended.

China agreed to end 100% tariffs on Japanese cars, air conditioners and mobile phones, avoiding retaliatory sanctions against its agricultural exports.

In exchange Tokyo dropped taxes imposed in April to protect farmers which prompted the massive retaliatory tariffs by China on consumer products worth hundreds of millions of dollars a year.

Asia's two largest economies reached "identical views" about Japanese import restrictions on the three Chinese agricultural products, China's Ministry of Foreign Trade and Economic Cooperation (MOFTEC) said in a statement.

"Both sides will cease the situation under today's agreement and try to find a long-term solution to this problem to promote orderly agricultural trade," the Japanese government said in a statement.

Roots of the row

The row began when Japan imposed a 200-day import restrictions on spring onions, shiitake mushrooms and rushes used to make traditional Japanese tatami mats, which are mostly imported from China.

Japan's "safeguard" measures, allowed by the World Trade Organization, expired on 8 November, and Tokyo had until Friday to decide whether to impose full four-year restrictions.

The original tariffs affected Chinese products with a value of $100m a year, while China's shut out Japanese goods have a value of about $700m a year.

Despite accounting for just a fraction of their estimated $80bn bilateral trade, the row damaged relations between the two countries for months as both refused to budge.

Japan was China's largest trading partner last year.

The BBC's Alison Gee
"The dispute escalated over the summer into a major trading problem for both countries"
The BBC's Rupert Wingfield Hayes
"The agreement appears something of a backdown for Japan"
See also:

10 Dec 01 | Business
End in sight for Japan trade row
10 Nov 01 | Business
China admitted to WTO
06 Sep 01 | Business
China denies Matsushita ban
31 Oct 01 | Business
China Japan trade row rumbles on
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