3/85 OIL TRADE--EXPORTS OK, IMPORTS NO - Lions Oil

The President of Lion's Petroleum, a small Japanese gasoline retailer recently made famous by his losing battle with MITI to import gasoline has stated "This situation shows that the trade liberalization measures promised by Nakasone are a bunch of lies." MITI's response was a classical defense of "domestic orderliness" in the face of the threat that imports present:

"Unrestricted gasoline imports would disrupt the stable product and price structure and raise the price of kerosene, which would hurt the consumer. (JAPAN TIMES 2/4/85).

Even the Japanese Foreign Ministry has requested that MITI revise its policies as possibly violating GATT. Again, legally there are no restraints on imports, it is only MITI's all conquering administrative guidance that stopped the imports, a factor foreigners have been complaining of for decades, but which MITI claims no longer exists. However, as the JAPAN TIMES reported MITI's response to the request of the Foreign Ministry:

Free trade principles can not be unconditionally applied to trade of such important products as petroleum goods, which are closely connected with national security.(JAPAN TIMES 2/6/85).

(Most of Japan's noncompetitive areas are protected based on this "national security" reasoning. This from a nation with virtually no defense spending)

The MITI Minister did state in the Diet that his ministry had established an advisory body to give recommendations on advisability of permitting the imports it says are not blocked. When questioned in the Diet whether MITI's policy did not violate GATT, the MITI Minister replied:

I do not believe that there is any problem as the businessmen made their own decisions freely in view of our recommendations.

Notably one of the large oil firms benefiting from the protectionist policies carried out by MITI stated that if some firms were given rights to import, then it wanted to be sure that it would be obtaining such rights.

The Chairman of the International Energy Association noted:It is quite strange that Japan would close its own petrochemical markets if it is seeking free entry into the markets of other nations...Japan says that it is opening its markets, but it appears that large Japanese corporations or the powerful MITI are going in the direction of not progressing in ending protectionism. (NIHON KEIZAI 2/14/85, p.3).

This double standard was made even clear with the announcement that Idemitsu Kosan, a major Japanese oil company had won a contract to export naphtha to South Korea. This was the first time for a Japanese oil company to make such exports. In the words of Japan's leading business daily the NIHON KEIZAI:

MITI has decided on a policy of freeing exports in oil products from FY 1985 as a part of the internationalization of the oil industry and this movement by Idemitsu Kosan should add further bounce to such orders in the future.(NIHON KEIZAI 2/26/85, p.9).

THE JAPAN LAWLETTER. March 1985. By Roderick Seeman