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Japan has joined the US in a complaint to the World Trade Organization (WTO), a move condemned by Chinese experts. A Japanese official insists the country is only acting as a third-party nation, but China's WTO specialists have denounced the action.

 

On February 2, the Bush administration lodged a complaint with the WTO in Geneva, alleging that China subsidizes export companies and harms US manufacturers in a wide range of industries. Two weeks later, the Japanese government notified China and the WTO of its intention to join the trade consultations.

 

"Technically speaking, Japan is not participating as a direct party, but as a third party," said a Japanese official, who asked to remain anonymous.

 

Insiders, however, see the matter in a different light. "The fact is (Japan) is following the US in adding pressure on China, yet with other things in mind -- pushing China to compromise on some issues," said Zhou Shijian, a senior WTO expert from the China Society for WTO Studies.

 

The issues, according to Zhou, include pressure to open up some business sectors, particularly financial services, wider and more quickly. He also noted that the appreciation of the renminbi has been a hot topic worldwide.

 

The Japanese official is of the opinion that regulation is the main focus. "Whether measures are illegal or not has not come out," he said. "We consider it more important that China meets its commitments to WTO agreements on subsidies."

 

Zhou said such an idea is "absolutely foolish."

 

"China has been following international standards in export subsidy policies," he explained. "If there are nations doing something beyond the WTO framework, China is not one of them."

 

In addition to export subsidies, the two nations are also unhappy with China's preferential tax policies for attracting foreign direct investment, which are expected to be adjusted in early 2008.

 

The Ministry of Commerce is now reviewing the case, and has 60 days to reply. The Japanese official said Japan is waiting for the outcome and will meanwhile continue bilateral talks.

 

Related reading:

 

Fifth Anniversary of WTO Entry

WTO China Updates

 

(China Daily February 27, 2007)