EU threatens to go to WTO over leather imports ‘promise’

The European Union has threatened to file a complaint with the World Trade Organization over Japan’s import restrictions on leather products unless Tokyo fulfills its “secret promise” to increase imports from Europe, Japanese government sources said May 13.

The European Commission, the executive arm of the 15-nation union, claims that Tokyo wrote a confidential letter to Brussels a few years ago during the Uruguay Round of world trade liberalization negotiations, promising to increase imports of European leather products, the sources said. The commission insists that the Japanese promise in the letter, signed by Noboru Hatakeyama, the then top Japanese trade negotiator, was made in exchange for Europe’s agreement to drop its demand for sizable cuts in high Japanese import-tariff rates for leather products, the sources said.

Japan agreed in the Uruguay Round to lower its import tariffs on mining and manufacturing goods by 60 percent to an average level of 1.5 percent, the lowest among the major industrialized economies. But leather products, to which high tariff rates apply, were excluded from the tariff reductions. Japan retains a tariff-quota system for imported leather products to protect its weak domestic industry.

The EU claims that Hatakeyama promised in the letter to expand leather imports from Europe in the future by increasing the quota with relatively low tariff rates, the sources said. Although the sources confirmed the existence of the letter, they would not make clear whether Tokyo interprets the document as promising to expand the import quota, as Brussels claims, or merely expressing Japan’s willingness to do so.