Japan seeks lifting of U.S. surcharge

Press, Volume CXI, Issue 32700, 1 September 1971, Page 1

Japan seeks lifting of U.S. surcharge

(N.Z.P. A.‘Reuter—Copyright) TOKYO, August 31. Japan today asked the United States to lift its 10 per cent import surcharge in a formal Note to the visiting United States Assistant Secretary of State for Economic Affairs (Mr Philip Trezise).

The Note to Mr Trezise said Japan had floated the yen in order to establish a new international monetary system in co-operation with other countries, the Foreign Ministry said.

This action had basically changed the situation which led the United States to impose the surcharge, it said.

The contents of the Note are being sent to the Japanese Embassy in Washington for relaying to the United States Government. Mr Trezise arrived in Tokyo on Sunday to explain the surcharge imposed by President Nixon on August 15 to the Japanese Government.

He met various senior government officials for talks this morning. The Foreign Ministry 1 said that an emergency meeting of the General Agreement on Tariffs and Trade last week had also demanded the surcharge’s swift removal because it ran counter to G.A.T.T. rules. Mr Trezise made no immediate comment, the Ministry said.

With E.E.C. ) Earlier today a Foreign i Ministry spokesman said Japan might consider joint < action with the European : Common Market against the ; surcharge. “The word retaliation is < too strong, at least at this I stage,” the spokesman said, i The Japanese request came . as the United States dollar continued to decline on the 1 foreign exchange market. 1 Local banks rushed to sell i sloom, pushing the value of < the floating yen about 6 per I cent above its old parity of i 360 to the dollar—abandoned by the Government last Sat-1 urday. j A spokesman for the Min- i istry of International Trade ] and Industry said that Japan i would not agree to a revalua- 1 tion unless the 10 per cent i

But the Vice-Minister (Mr Yoshihiko Morozumi) ruled out Japanese retaliation.

Type of measure

Although Finance Ministry officials also said that the Government had no such policy at present, observers speculated on the type of retaliatory measures Japan could take. These could include discriminatory increases in import tariffs, import quota restrictions and possible removal of voluntary export controls over items such as steel and textiles sent to the American market. There was no confirmation from official sources that any of these measures were being contemplated. The Foreign Ministry spokeman said: “If the United States maintains the surcharge over a long period of time some kind of discussion and joint action between the E.E.C. and Japan might become necessary eventually.” The yen-dollar exchange quotations moved to 339.30 yen from 341.00 at the close yesterday. Dealers said there were indications that the value of the dollar might further decline, unless the Bank of Japan intervened. With uncertain trading on the exchange market so far, local export industries remained confused and worried over the effects of flotation of the yen and the American import surcharge. One of Japan’s top shipbuilding companies, Ishikawa-jima-Harima Heavy Industries said it had temporarily suspended all export shipbuilding negotiation, hoping flotation would be for a short period.

The company said shipbuilding and shipping industries would seek Government compensation for losses they would incur on their longterm dollar assets. The nation’s largest car maker, Toyota also warned

• that the yen’s flotation would ■ have a severe impact on the t competitive position of Japr anese cars in the world. The company said it would shortly announce its new r pricing policy following the IJ Government move.

American surcharge was lifted.