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China versus Japan: On the Verge of a Trade War  
 
Product Ref: 07/343C Company: N/A

Product Type: Case Industry: Others

Related Product(s): Teaching Note
In April 2001 Japan curbed imports on three Chinese farm products - fresh shiitake mushrooms, rushes for grass mats and Chinese onions. In retaliation, in June 2001 China imposed a 100% punitive tariff on imports of three Japanese export products - motor vehicles, mobile phones and air conditioners. Japan was accused of violating WTO rules. The dispute was subsequently resolved but given that China was not a WTO member at the time of the dispute, the case generated a lot of controversy regarding trade safeguard measures. The case introduces students to the WTO dispute settlement mechanism and compares it to the old GATT system. It also highlights the role of political interest groups in trade policy. The case questions whether Japan had a case for citing their safeguard measures or was it just protecting its powerful shiitake mushroom farmers. In addition, the case questions whether WTO membership would in turn protect China from trade disputes such as this one.
Functional Area : Economics & Business Policy

Issues: Trade disputes, WTO members vs non-members, Dispute Settlement Mechanism, negotiation and retaliation, lobbying by farmers, political interests.
Length: Text: 5 pages
Exhibits: 11 pages
Country: China (People's Rep. of)
Japan

Pub. Year: 2007 Level of Difficulty: 1
         
This product type is available in the following language(s):      English
         
Related Information: China, Japan, mushroom, dispute, WTO, GATT, Dispute Settlement, agricultural protection, retaliation
 
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