JEI's Spin on the News

Japanese Petrochemical Makers Charge Dumping

Tuesday, October 20, 1998

Japanese producers of a wide variety of products for decades have had to contend with American laws that restrict their ability to charge low prices in the U.S. market. Such antidumping actions have been such a nuisance that Tokyo tried hard, with limited success, to force Washington to water down as part of this country's commitments under the multilateral trade agreement reached earlier this decade.

Now the shoe may be on the other foot. Five Japanese petrochemical companies have charged BP Chemicals Inc. of the United States, a South Korean and South African firm of selling acrylonitrile, a product used indirectly in acrylic fiber and car interiors, at a price in Japan roughly 30 percent below that in their home markets. The Ministry of International Trade and Industry and the Ministry of Finance will assess whether the five domestic firms were damaged and what an appropriate tariff to offset the dumping margin might be.

The action apparently represents the first time Japanese firms have accused an American firm with dumping, although in the past charges have been filed against firms headquartered elsewhere. Those cases were resolved bilaterally without the dumping investigation and penalty provisions running their full course.

That may happen this time as well. One interesting prospect is the possibility that the petrochemicals' complaint may become associated somehow with requests from American industries to Washington for "import relief." Steel makers' complaints about imports from Japan and other nations have received a sympathetic response this year from Capitol Hill. At this juncture, such a linkage appears unlikely, because the Japanese complaint lacks credibility. Japan has a very limited track record in the pursuit of dumping cases. Moreover, the Japanese petrochemical industry's chronic lack of competitiveness is widely known. Finally, the U.S. steel market is far larger than that for acrylonitrile. At a minimum, however, the parallel developments in Japanese petrochemicals and American steel suggest that trade tensions could be rising in response to unsettled international economic conditions.

"JEI's Spin on the News" are the opinions of one of more members of JEI's staff and do not necessarily represent the views of the organization.

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