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Tuesday, 3 July, 2001, 01:27 GMT 02:27 UK
China and Japan tackle trade row
Prime Minister Junichiro Koizumi and Chinese Premier Zhu Rongji
China and Japan are beginning two days of talks in Beijing to try and settle a trade row with allegations of protectionism on both sides.

Japan said ahead of the talks that discussions on its recent import curbs would be separated from talks on China's retaliatory measures when officials met.

Trade relationship
Trade between the two countries was worth $83bn last year
Chinese agricultural goods affected are worth $100m
Japanese goods that could be affected are worth $700m
"It is appropriate for us to listen to their arguments carefully and hold talks to improve the situation in a calm and constructive manner," said Japan's Prime Minister Junichiro Koizumi.

Earlier the two-and-a-half month old trade row between both countries escalated after Beijing said that it would impose punitive tariffs on some Japanese goods.

Speaking on Monday Japan's Vice Trade Minister Katsusada Hirose reiterated his position that his country's import curbs on some farm products from China complied with World Trade Organisation rules.


It is a step forward that we sit at the table for talks, but there may be a long way to go

Japanese official

China's punitive tariffs on Japanese products did not, he said.

"There are two issues. While it is debatable which one to deal with first, they cannot be discussed simultaneously," Mr Hirose said

The spat has become increasingly acrimonious after China slapped 100% punitive tariffs on imports of Japanese cars, mobile phones and air conditioners last month in retaliation at Japan's decision in April to impose import curbs on some farm products that come primarily from China.

Protectionism

Japan has maintained that its so-called safeguard measures - on shiitake mushrooms, leeks and rushes for tatami mats that cover the floors of traditional Japanese homes - were compliant with WTO rules.

China says the moves amount to protectionism.

Under WTO regulations, a country must prove that imports of certain products had increased significantly and had been, or were likely to be, damaging to the domestic industry in order to invoke safeguard measures.

When Tokyo began investigations on safeguards for the three farm products last December, it found that leek imports had increased ninefold in the two years to the fiscal year from 1999 to 2000 and prices had dropped by 12%.

In April, the government decided to impose a 256 percent tariff on leek imports exceeding 5,383 tonnes over the 200 days from 23 April - an amount reflecting the average import volume in the past three years. The tariff on imports within that ceiling remains 3%.

China had previously ruled out talks until Japan scrapped its curbs and diplomats said both sets of curbs would be on the table this week despite Japan's insistence they could not be discussed at the same time.

"It is a step forward that we sit at the table for talks, but there may be a long way to go," a Japanese trade official was quoted by the Kyodo news agency as saying on Sunday.

WTO talks

An official of the Chinese foreign trade ministry said, "We will take a positive attitude towards the talks. But the result will depend on the content of the talks."

The talks come as China and WTO members hold high-level multilateral discussions in Geneva aimed at getting China into the world trade body before the end of this year.

Once China joins the WTO, the body will provide a mechanism to resolve trade disputes like this one with Japan.

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