Japan launches probe of Asian textile imports

Japan launches probe of Asian textile imports

TOKYO (Kyodo): The Ministry of International Trade and
Industry (MITI) launched a probe yesterday of certain Asian
textile imports that could lead to Japan's first curbs on imports
of industrial manufactured goods.

At the request of industry groups claiming damage from a flood
of imported Chinese, South Korean and Indonesian thread and
Chinese and Indonesian cloth, MITI chief Ryutaro Hashimoto said
his ministry has begun the one-year investigation.

But he expressed hope that the exporting countries would
restrict their own exports "to take care of the problems so that
a decision does not become necessary."

The investigation, based on MITI rules drawn up in December,
will not only cover the damage to domestic industry of the cheap
imports but also the effects on consumers and Japan's trade
policy if imports are restricted, MITI officials said.

The rules require MITI to complete the investigation within 12
months, but the officials said the ministry will try to conduct
the probe as quickly as possible.

Industry leader Sadao Hirose called the probe "the first step
of a policy of making imports orderly," urging that import curbs
be launched "as quickly as possible."

"The recent rapid advance of the yen is accelerating imports
and forcing the textile industry in an increasingly serious
situation," the president of the Japan Spinners Association and
of Fuji Spinning Co. said in a statement.

"I strongly hope for the enactment of import restrictions from
the viewpoint of allowing the domestic textile industry to
remain," he said.

The spinners' association sought restrictions on No. 40 count
cotton thread imports, while the Japan Cotton and Staple Fiber
Weavers Association sought curbs on imported poplin and cotton
broadcloth.

If MITI decides to launch the three-year curbs under industry
"safeguards" provided in global trading rules, imports would be
frozen at previous year's levels for one year and allowed to rise
6 percent for each of the next two years.

MITI does not target any country for the curbs, but its
documents show China, South Korea and Indonesia accounted for 78
percent of last year's 45,000 tons of the thread imports, with
China alone accounting for 41 percent.

Of the 232 million square meters of the imported cloth, China
and Indonesia provided 96 percent, with Chinese imports alone
making up 76 percent of the total, the MITI figures show.

MITI rules allow for the curbs to be lifted during the three
years if prices surge or if domestic makers do not show they are
using the time to make structural adjustments. MITI must be
"cautious" in launching subsequent curbs, the rules say.

The ministry decided to launch the probe after a preliminary
investigation found import volumes and market share were soaring
under the ministry's definitions.

Imports of the No. 40 count thread jumped 89 percent last
year, with import share swelling 17 percentage points to 42
percent, MITI said. Domestic production fell 14 percent in the
year.

Cloth imports fell eight percent in 1994 but following a 40
percent surge the year before they remained 28 percent higher
than in 1992, MITI said. Domestic production for the two years
fell 38 percent.