Experts have high hopes of ending Japanese emergency safeguards against some farm imports, mainly from China, and China's imposing special tariffs on three Japanese industrial products in response.

"The next meeting, widely expected to be held in Tokyo soon, will move closer to disentangling the dispute," said Li Guanghui, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation.

He told China Daily that Japan was expected to bring forth a plan for solving the dispute at the next meeting.

Li described the last meeting between China and Japan in Beijing July 3-4 as "constructive and fruitful," although the talks failed to make substantial progress in solving the dispute.

"The two sides have at least got to know what the other side is thinking through the talks and this could serve as reference for both sides' decision-making," said Li.

He said the talks had failed to make substantial progress largely because Japan had not yet decided on a plan to solve the problem.

"Japan is purposefully delaying the decision-making, although showing a positive attitude towards solving the problem," said a source with the Chinese negotiation team after the talks concluded on Wednesday.

Li said it was hard for Japan to make up its mind before its July election.

Japan declared emergency tariffs in early April on imports of onions, mushrooms and tatami rushes, mainly from China, triggering off the row.

The move, to last from April 23 to November 8, was widely seen as politically motivated as Japanese statistics failed to prove that increasing imports had damaged the welfare of Japanese farmers.

Japan rushed to protect its uncompetitive farmers so as to win their support at the July election, said Li.

Japanese statistics indicate that imports of onions accounted for 8.2 percent of Japan's total onion sales last year, compared with 0.4 percent in 1996; imports of mushrooms made up 39 percent of Japan's total sales last year, compared with 26 percent in 1997; and imports of rushes accounted for 59 percent of Japan's total sales last year, compared with 26 percent in 1997. Almost all these imports came from China.

Economists said Japanese companies have lost their competitive edge in the farming industry and shifted their production to neighbouring countries.

The Japanese move met with strong opposition from Japanese companies that have invested heavily in China to sell their products back to Japan, as well as Chinese officials who insisted that the measure was not taken in line with World Trade Organization (WTO) rules.

Japan did not compensate China in other products or industries while taking the emergency protective measures, as is required by WTO rules, they said.

Because it is not yet a WTO member, China cannot bring the case to the world trade body for judgment but has to turn to bilateral negotiations to solve the problem.

After Japan turned a blind eye to China's strong demands of immediately calling off the emergency tariffs, China decided in late June to impose 100 percent extra tariffs on imports of automobiles, mobile phones and air-conditioners.

(China Daily 07/06/2001)