The government will begin a formal probe later this month to decide whether to invoke curbs on surging towel imports, primarily from China, Takeo Hiranuma, minister of economy, trade and industry, said Friday.
"We will start a formal investigation based on a request from the towel industry. We will take procedures within the framework of the World Trade Organization," Hiranuma told reporters.
The Ministry of Economy, Trade and Industry will check 11 items, including productivity and the employment situation in the towel industry, as required under the WTO rules, starting April 16.
The ministry will also consider such factors as the necessity of import curbs from the standpoint of consumers and the causal relationship between the increase in towel imports and damage to the domestic industry.
The ministry will decide whether to invoke import curbs on towels within six months of the start of the investigation.
These procedures are in accordance with the Agreement on Textile and Clothing under the WTO, which allows member countries to initiate import restrictions when the rise in imports severely damages the domestic industry.
In February, the Japan Towel Industrial Association urged the government to invoke import curbs, claiming the surge of imports from China and Vietnam was severely damaging their business.
After the petition, the ministry conducted a preparatory probe and judged there is sufficient evidence to launch a formal investigation.
Towel imports grew 34 percent from 48,333 tons in 1998 to 64,997 tons in 2000, while the market share of imports increased some 12 percent.
However, there is contrasting demand within the domestic towel industry. Some Japanese towel makers that have a manufacturing base in China and export towels to Japan do not want the government to invoke import curbs.