• Kyodo

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A top U.S. trade official on Thursday turned up the heat in the steel dispute, saying a step toward retaliation taken by Japan could threaten a partial settlement to the issue.

Japan has been threatening to retaliate against so-called safeguard tariffs Washington imposed in March, and notified the World Trade Organization to that effect last week.

“I must tell you,” Deputy U.S. Trade Representative Jon Huntsman told Kyodo News, “that the action that Japan has taken by providing notification to the (World Trade Organization) on unilateral retaliation . . . may color somewhat ultimate decisions that are made on further exclusions.”

In response to three-year tariffs of up to 30 percent imposed by the United States on an array of steel imports, Japan notified the WTO on May 17 of its plan to slap 100 percent retaliatory tariffs on imports of U.S. steel products effective June 18.

Before Japan informed the WTO of its intentions, Takeo Hiranuma, minister of economy, trade and industry, and U.S. Trade Representative Robert Zoellick held several rounds of face-to-face and telephone talks but failed to settle the dispute.

Because the U.S. has rejected Tokyo’s call for compensating its potential losses from the steel import curb, Japan is hoping Washington will grant exclusions to as many Japanese products as possible.

Washington is evaluating products that are not currently made in the U.S. and considering whether to grant exclusions to them in view of the benefits to U.S. industries that depend on foreign steel products.

Huntsman criticized Japan for notifying the WTO of its retaliation plan without waiting for a ruling by a WTO dispute-settlement body.

“We are disappointed and we think Japan should have played this out through the proper WTO procedure,” he said.

Huntsman suggested the U.S. may consider retaliation of its own if Japan imposes the tariffs as planned.

“We will have to keep all of our options open, obviously,” he said.

At the same time, however, Huntsman stressed the need for the two countries to negotiate a settlement by keeping in mind the importance of overall bilateral relations.

Huntsman expressed hope that Hiranuma and Zoellick will meet again and make last-ditch efforts to avoid falling into a tit-for-tat trade war.

“I think another round of discussions is inevitable,” he said, but added that future Hiranuma-Zoellick talks have not yet been scheduled.

Huntsman, who represents the U.S. in high-level bilateral deregulation talks, called on Japan to promote deregulation in an effort to put the Japanese economy on a sustainable recovery path.

Regulatory reforms that target long-term and sustained action by Japan will free up the Japanese economy for many years to come, he said. “And we think over the longer term that this is perhaps the most important area of public policy that Japan could be focused on.”

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