U.S. threatens ban on Japanese ships

By Eun-Kyung Kim Associated Press Published:

Under orders imposed Thursday by the Federal Maritime Commission, the Coast Guard would turn away ships from the three Japanese companies while the U.S. Customs Service would detain those already in U.S. harbors.

The orders were not to be carried out, however, until the end of today to give negotiators more time to reach a settlement, Commission Chairman Howard Creel said.

The ban was imposed after Japanese shipping companies failed to meet the deadline for paying an estimated $4 million in fines imposed by the commission.

Both sides met late into Thursday night at the Transportation Department before agreeing to resume talks this morning.

A ban on Japanese ships entering U.S. harbors would affect billions of dollars worth of products going back and forth between the world's two biggest economies, because Japanese ships also transport U.S. goods on their return voyages to Japan.

The companies _ Mitsui O.S.K. Lines, Ltd., Kawasaki Kisen Kaisha Ltd., and Nippon Yusen K.K. _ typically carry containers of boxes that can be loaded onto railroad cars, Creel said. Their cargo does not include automobiles, he said, or grain or steel, for example, which is usually shipped in bulk.

The most immediate impact would be on American retail stores trying to stock their shelves for the upcoming holiday season. Japanese televisions, radios and other electronic goods could become harder to find if a ban on Japanese ships were imposed, trade analysts said.

"It could take a lot of joy out of the Christmas holidays," said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

President Clinton has the authority to overturn the commission's decision on national security grounds. Presidential spokesman Mike McCurry, traveling with Clinton in Argentina, refused to say whether the president would intervene.

"I'm not predicting or speculating at this point," McCurry said.

Another White House spokesman, P.J. Crowley, said the Japanese carriers "should pay their overdue fines immediately," but added that the administration was more interested in resolving the dispute than imposing sanctions.

The Japanese Shipowners' Association called the U.S. move "one-sided and unfair."

"We feel it will cause a large blot on friendly relations between Japan and the United States," it said.

The U.S. action was "regrettable," said Japan's Transport Minister, Takao Fujii.

For months, the United States warned that the battle would escalate if Japan refused to loosen its restrictive port regulations for American cargo ships.

U.S. and other foreign shipping companies long have complained that Japan requires all shippers to receive prior approval for even the most minor operational changes in handling cargo at Japanese ports.

U.S. negotiators were demanding that these restrictions be eliminated so that American shippers would have the same privileges at Japanese ports that Japanese lines enjoy in the United States.

The sanctions, which amount to $100,000 per vessel, were levied on Japanese cargo ships entering U.S. ports beginning Sept. 4. The three major Japanese shipping companies involved had until Wednesday to actually pay the fines, and many U.S. officials were taken by surprise when they refused.

News of the order shocked members of the shipping industry.

"That's the sort of thing you do when you go to war with a country," said Jay Winter, executive secretary of the Steamship Association of Southern California.

Peter Gatti of the National Industrial Transportation League, the country's largest trade group for U.S. shippers, also expressed surprise but said he supported the commission's decision because it could prompt the Japanese government to change its policies.

"They're discriminatory. They rarely impart the kind of efficiency needed to facilitate the trade between United States and Japan," he said of Japanese regulations. "But, obviously, we're concerned about any action that would impede the free flow of commerce."

Gatti said the biggest concern would be freight already on its way to U.S. ports.

"We'd be looking at considerable delays at considerable costs to reroute

traffic," most likely through Canada and Mexico, he said. "We're hopeful

that it doesn't go to that grave of circumstance."

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