October 17, 1997 in Nation/World

U.S. Moves To Bar Japanese Trade Ships Vessels In American Ports Could Be Seized Over $4 Million Fine

Evelyn Iritani Los Angeles Times

The Federal Maritime Commission voted Thursday to bar Japanese container ships from entering U.S. ports and seize ships already in port beginning as early as this morning.

The commission took the surprising and unprecedented step after three Japanese shipping companies refused to pay a $4 million fine levied by the commission last month in a bitter bilateral dispute. It represents the first time that foreign vessels have been banned under a 1920 U.S. maritime law.

The U.S. move turns a back-burner problem into a high-stakes confrontation and comes as U.S. and Japanese officials are struggling to resolve contentious disputes in aviation, automobiles and photo film trade.

But observers said they doubt the two nations will let the predicament spin out of control, given the enormous problems it would cause in both countries and the fact that it could be defused by the payment of a relatively small fine.

The dispute was sparked by complaints that U.S. vessels face unfair and costly restrictions in Japanese ports.

Nonetheless, confusion reigned throughout the shipping world as Japanese shipping executives and U.S. government and port officials scrambled to figure out how the commission’s action would play out.

A spokesman at the Japanese Foreign Ministry said Thursday morning that it had no immediate comment on the U.S. action.

Japan’s Kyodo news service, quoting an unidentified shipping industry source, reported that the Japanese shipping companies had been prepared to make the payments by the Wednesday deadline but that “the Japanese Transport Ministry instructed the three shippers to withhold the payments because talks are under way.”

Meanwhile, companies dependent on Japanese shipping lines were scrambling to line up alternative carriers and hoping that their most time-sensitive cargoes would not get caught in the cross fire.

“I have some critical freight that needs to go out on a NYK vessel next Friday, so we are watching this very carefully,” said Patty Mura, national import/export manager for Mitsubishi Electric America in Cypress, Calif. She said the shipment is elevator equipment headed for a customer in China.

Japanese executives were caught off-guard by the commission’s action, but they remained hopeful Thursday that the dispute would be resolved before any vessels are barred or impounded. The two sides were talking late Thursday night in Washington.

“We’re surprised and disappointed,” said Dodd Fiori, a senior vice president in the New Jersey offices of Japan’s NYK Line North America. “We had no expectation this was going to escalate into this kind of thing.”

The other two Japanese shipping lines affected by the U.S. action are Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd.

The three Japanese shipping lines, which are in partnerships with eight other foreign carriers, including American President Lines, are likely to shift as much cargo as possible to ships owned by their foreign partners.

“We are keeping our services going and expect to be able to continue servicing our customers,” said Ray Keene, executive vice president of Mitsui OSK in Concord, Ca.

President Clinton has the authority to overturn the commission’s vote on national security grounds. But a White House spokesman traveling with the president in Argentina would not speculate Thursday on whether any action would be taken.

The pressure to reach an agreement and avert a full-scale trade war is tremendous, since the increasingly interdependent economies of the United States and Japan would be badly disrupted if a large chunk of their multibillion dollar trade was suddenly shut down.

The Japanese shippers argue they have gotten unfairly caught up in a dispute that was triggered by U.S. dissatisfaction with the way Japan operates its ports.

In September, after the two governments were unable to resolve their differences, the commission imposed penalties of $100,000 on every Japanese container ship that enters U.S. ports. The total fines so far have reached $6 million, of which $4 million was due Wednesday.

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