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Sanctions Could Lead to Trade War, Electronics Official Warns

April 18, 1987

TOKYO (AP) _ The U.S. decision to impose punitive tariffs on Japanese electronic products could lead to a trade war, the chairman of the Electronic Industries Association of Japan said today.

The action could also damage the future of the electronics industry, said chairman Shoichi Saba.

″The U.S. decision defies logic because the ‘retaliation’ imposes draconian ‘punitive’ tariffs on Japanese products other than semiconductors,″ Saba said in a statement.

″The utmost efforts should be made to avoid the possibility to stir up protectionism and nationalism in both nations which might lead to a trade war between the U.S. and Japan,″ he said.

The United States announced Friday it would impose tariffs on $300 million worth of goods, or about a third of 1 percent of all the products the United States imports annually from Japan.

President Reagan announced the sanctions Friday to retaliate for Japan’s alleged violation of a bilateral accord on semiconductors reached last July.

Japan denies U.S. charges that it broke the accord by selling computer memory chips overseas at prices below production cost and that it has failed to open its markets to more U.S.-made chips.

″We greatly fear that the decision will also damage the future growth of the electronics industry - the core of many high technology industries,″ Saba said.

He joined other government and industry officials in urging a swift withdrawal of the measures.

Government officials said Japan will not take immediate retaliatory moves but will request bilateral talks under the General Agreement on Tariffs and Trade.

GATT is a system of tree-trade rules set up in 1948 to reduce trade barriers through international negotiations. GATT has 92 member nations and covers more than 80 percent of world trade.

International Trade and Industry Minister Hajime Tamura said the U.S. sanctions discriminated against Japan and thus violated GATT rules, which allow members to take action to balance trade concessions or restrictions adopted by other nations.

″We have decided against taking any immediate retaliatory move,″ he said, but he added that countermeasures from Japan depended on the outcome of future talks.

On Tuesday and Wednesday, Tamura is scheduled to hold trade talks with U.S. Trade Representative Clayton Yeutter in Tokyo.

″If the problem can be solved (then), that would be best,″ Tamura said.

The sanctions apply to four categories of goods including color televisions; rotary drills and other power tools; desktop computers and calculators; and laptop computers.

The effect on American consumers is expected to be minimal. Products were chosen for which there are American or other non-Japanese alternatives available at lower prices.

In a related development, the governing Liberal Democratic Party on Friday approved a new package of economic proposals designed to ease trade tensions by boosting imports and increasing Japan’s contribution to overseas economic assistance programs.

Shintaro Abe, a former foreign minister and now chairman of the party’s Executive Council, planned to leave for Washington on Sunday as a special envoy of Prime Minister Yasuhiro Nakasone. Nakasone will visit the United States on April 29.

Abe was to include the party’s policy package in his explanation of efforts Japan is making to increase imports. The U.S. trade deficit with Japan has been a source of friction between the two nations.

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