TOKYO -- Japan's trade ministry will work with the U.S. and the European Union to expand its use of tariffs targeting state-subsidized imports sold in the country at unfairly low prices.
Tokyo looks to encourage businesses to request countervailing duties, one option allowed by the World Trade Organization when excessive subsidies from an exporting country enable goods to be sold so cheaply that domestic industry cannot compete.
The U.S, the EU and others have often opted for this remedy in cases where foreign products are seen as distorting markets, with Chinese steel becoming a frequent recent target. But Japan has virtually has no experience, having used them only once, against South Korean chipmaker Hynix in 2006.
A request from an affected company is needed to kick off the process, but this mechanism is little-known and the paperwork can be complicated. The company seeking the duty must also show that the products in question were subsidized by another country -- a task that can be made difficult by poor disclosure of such funding by foreign authorities.
To address this, Tokyo will seek cooperation from overseas trade authorities more experienced with countervailing duties, particularly Washington and Brussels, to share subsidy information and investigation methods.
Trade investigators from Japan, the U.S., the EU, Australia and Brazil will launch a framework for cooperation this fall. Brazil has been particularly aggressive in using trade remedies.
There has been talk at the WTO about banning a broader range of industrial subsidies, but discussion is at a standstill. The five-party framework will provide a venue for sharing investigation methods and challenges and discussing how to address unfair industrial policies.
The European Union last year imposed a countervailing duty on products manufactured by Egyptian companies that received financing from China under Beijing's Belt and Road initiative. This marked the first such case involving subsidies from a third country.
Japan also plans to hold regular bilateral meetings with the U.S. and EU, which have both made frequent use of countervailing duties over the past few years to offset subsidies on Chinese steel. The U.S. has imposed countervailing duties 173 times since the WTO was established in 1995, the highest total by far, followed by the EU with 45.
A trade ministry committee will put together recommendations by early September to make the process easier for businesses. The ministry will release guidance for applications by the end of this fiscal year.
Tokyo will work with individual industries to determine potential targets, with a focus on items that have frequently faced tariffs from other countries, including Chinese and South Korean steel, aluminum and chemical products.