Japanese industry finds what it's like to be hit by 'dumping'
A ''man bites dog'' news story to amuse American politicians and businessmen: Japan is complaining about import dumping.
For years, the United States and Western Europe have accused the Japanese of exporting at unrealistically low prices to carve out a dominant market share to the detriment of local industries, rather than considering immediate profit.
Now the boot is on the other foot, and American businesses hurt by tough Japanese competition can perhaps be forgiven a quiet smile.
Japan has had an antidumping law since 1954, but it has never been used. Government officials say this is partly because it would not look good for Japan , a major beneficiary of free trade, to take such legal measures against imports.
This is particularly true now as Japan faces the possibility of other nations taking restrictive measures against some of its exports (e.g., France against videotape recorders).
Equally important in the past, however, was that Japanese industry could handle the competition with ease. If protection was needed, it was available through tariff quotas, nontariff barriers, and ''antirecession cartels.''
But the Japanese economy has lost some of its dynamism in recent years. Some important basic-materials industries like aluminum refining have already succumbed to low-cost imports, and others are struggling to cope.
Accelerated efforts to open up the Japanese market, under heavy American and European pressure, have also increased the vulnerability of many industries.
Now, for the first time, some are demanding the government not only invoke the provisions of the antidumping law, but also give it more teeth.
Cotton spinners are the first to venture out into the untested waters. The Japan spinners association is filing a formal antidumping complaint against imports from South Korea and Pakistan.
Having badly hurt the textile industries of Western nations in the past, the Japanese are now tasting the same medicine. The textile industry has a higher rate rate of bankruptcies than any other.
The difficulty is that, as there is no precedent for such an action, no clear government guidelines have been established for dealing with a complaint and meting out penalties like countervailing duties.
Naturally, the spinners' move is being closely watched.
Waiting in the wings is the steel industry, having its worst slump in over a decade, which claims it is being badly hurt by soaring shipments from so-called ''new Japans'' like South Korea and Taiwan, whose wage costs are still comparatively low while productivity is extremely high (both countries have gained greatly from Japanese technical assistance).
Steel companies have set up a special committee headed by a former senior government official to investigate how the antidumping legal provisions can be carried out. Meanwhile, the ferroalloy industry, reeling from high energy and imported raw material costs, is gathering evidence for its own antidumping complaint.
The threat of cheap imports is not just from the newly industrializing countries, however. The petrochemical industry earlier this year threatened antidumping action against its American rivals.
The industry's main problem is that the basic building block, naphtha, has to be imported at great cost. The US and other industrialized nations have an advantage through getting their naphtha from cheaper domestic natural gas.
Considering Japan's sensitive situation in the world trade structure, the government is not encouraging the current moves to clamp down on imports.
Kazuo Sugiyama, the new vice-minister of International Trade and Industry, said: ''(this ministry) does not have the slightest intent of curbing imports to help ailing industries. Even if structurally depressed industrial sectors are being badly hurt by cheap imports, we will not set up any barriers.
''What we want to do is to strengthen these industries by exposing them to more competition in an open economic system.''
Commenting on possible antidumping suits, Mr. Sugiyama said that ''a psychological barrier will have been removed encouraging other industries to follow suit, which would be bad for Japan.''
As a countermeasure, the Ministry of International Trade and Industry is rushing to complete work on a bill aimed at bailing out industries in trouble like petrochemicals, aluminum smelting, ferroalloy, chemical fertilizers, polyvinyl chloride resin, chemical fibers, and paper pulp.
Measures include government loans to help them withdraw from unprofitable fields in which they have lost international competitiveness and branch out into new business lines. Banks will be able to lend money at low interest rates to liquidate redundant production facilities and pay severance allowances to unwanted workers.
The government will also offer debt guarantees and subsidize interest payments for a certain period while companies try to get back on their feet, and will set up a fund to develop new technologies for the depressed industries.