Japan yesterday accused China of breaking World Trade Organization (WTO) trade rules in a bilateral trade dispute that has halted fully assembled car imports, Kyodo News reported.

The news agency said that the Japanese government raised its trade dispute with China at a WTO multilateral negotiation session on China’s WTO membership, after failing to settle the issue in bilateral talks with the Chinese government in Beijing.

The dispute, which began three months ago with a Japanese decision to curb Chinese farm imports, stems from Japan’s decision last April to invoke the WTO’s ‘safeguard’ mechanism in imposing temporary curbs on imports of shiitake mushrooms, leeks and rushes, Kyodo News said.

China, which accounts of the bulk of Japan’s imports of these three farm products, retaliated last month by levying punitive tariffs on the import of Japanese-made fully-assembled vehicles, mobile phones and washing machines, Kyodo News said.

Chinese orders for fully-assembled vehicles due to be built in Japan during July were immediately cancelled, with importers saying that the increased tariffs would raise retail prices to levels unacceptable to Chinese buyers.

Japan’s envoy, speaking at yesterday’s multilateral negotiating session, said that China’s reprisal violates WTO trade rules as well as bilateral trade agreements, Kyodo News said.

Citing trade sources, the news agency added that Japanese officials told the closed-door session that the Chinese government has responded to Japan’s plea to call off the reprisal by suggesting that China does not yet have to abide by WTO rules as long as it is not yet a member.

The Japanese government also raised its trade dispute with China with the WTO multilateral negotiation working group on June 28, Kyoto News added.

Japan claims that China imposed the reprisal tariffs, fully aware that the measure would violate WTO rules which stipulate that retaliation against a ‘safeguard’ measure is allowed only after the measure is in force for three years, the news agency added.

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