"They (Japanese officials) are moving in the right direction," said a senior Chinese trade official, commenting on the November 1 bilateral talks between China and Japan in Beijing.

The meeting of Chinese and Japanese department directors-generals failed to solve the issue but the two sides agreed to continue to actively consult and conduct non-government bilateral talks on the issue.

Japanese Minister of Economy, Trade and Industry Takeo Hiranuma said last week a talk between Chinese exporters and Japanese farmers would be held in Tokyo this week.

Japan also announced late last month it would not immediately launch formal protective measures after the temporary import restrictions expire on November 8.

China has stood its ground, with senior Chinese officials saying they are not prepared to lift China's retaliative measures until Japan withdraws its tariffs.

They said further protective measures from the Japanese side were still possible.

Japan started investigations into a number of products primarily imported from China on December 22 last year and has to make a decision on whether to adopt protective measures before December 21, according to Japanese law.

The Chinese trade official said China would not call off its retaliatory measures in case Japan makes an unfavorable decision against China.

Japan imposed temporary import curbs on onions, mushrooms and tatami rushes on April 23.

The curbs expire on November 8 according to Japanese law.

The move is widely believed to be politically motivated as the government is sensitive to the well-organized and politically powerful Japanese farm lobby.

China retaliated on June 22 with 100 percent customs duties on the import of automobiles, cell phones and air conditioners from Japan.

China imports about US$1.5 billion of these three product categories from Japan each year, compared with annual exports of US$100 million in onions, mushrooms and tatami rushes to Japan.

China's retaliatory measures have led Japanese customers and industries to criticize their own government.

"But the Japanese Government has yet to bridge internal differences before clinching a deal with China," said a member of China's negotiation team.

While the Japanese Ministry of Foreign Affairs and the Ministry of Economy, Trade and Industry does not want Japan's trade protectionism to damage its long-term bilateral trade ties with China, the Ministry of Agriculture, Forestry and Fisheries is committed to protecting uncompetitive Japanese farmers.

Sino-Japanese trade reached US$85 billion last year and is expected to rise to over US$90 billion this year.

Analysts believe the trade row is unlikely to be resolved in the near future.

Japanese officials have said no ministerial meeting is scheduled, despite analysts saying such a meeting is crucial for the resolution of the dispute.

"No ministerial meeting is set, although I don't exclude the possibility of having one in the future," said Tanaka Hitoshi, director-general of Asian and Oceanian Affairs Bureau under the Japanese Ministry of Foreign Affairs.

Sana Tadakatsu, director-general of Trade Policy Bureau under the Ministry of Economy, Trade and Industry, said Chinese and Japanese ministers would discuss the issue on the sidelines of their meetings in Brunei on November 5-6 and in Doha, Qatar, on November 9-13.

Tanaka Hitoshi said he hoped the issue would be resolved before China's formal entry to the World Trade Organization but refused to elaborate on what he meant by "formal entry."

China is expected to be "formally" approved as a member by the WTO ministerial meeting on November 9-13 in Doha of Qatar.

But the country would become a "formal" member only after the legal documents were ratified by the legislatures of WTO members and China, widely expected at the end of this year or early next year.

(China Daily November 6, 2001)