Trade Barriers GENEVA-A dispute settlement panel of the World Trade Organization today handed down a sweeping judgement that Japan's traffic laws constitute a barrier to trade and must be changed. The judgement is considered a major victory for North American and European auto producers, who argued before the WTO that Japan's requirement that vehicles drive on the left side of the road established an unfair barrier to imports of cars and trucks. As one auto industry lobbyist explained, "The Japanese government literally forces its citizens to drive on the wrong side of the road. It's the major reason why they don't buy our left-hand-drive vehicles." The WTO panel is similar to those that forced Canada to abolish the Auto Pact, its pharmaceutical patent laws, its domestic magazine policy, an aerospace technology program, and several agricultural marketing boards. The Japanese government must now enter into negotiations with other countries to determine a timetable for reforming its traffic laws. A WTO official, who wished to remain both nameless and faceless, stressed that Japan would be given a "reasonable period of time" to phase in right-side-of-the-road traffic rules. "We're not heartless," said the official. "We're not going to force them to make this change overnight." A transition period of up to 18 months will be permitted, during which Japanese drivers will gradually begin to drive on the right. Sales of imported vehicles in Japan are expected to enjoy an immediate boost as a result of the WTO decision. Large North American sport utility vehicles, such as the Dodge Durango and the Lincoln Navigator, will likely experience the greatest increases in market penetration thanks to their enhanced ability to withstand head-on collisions. The tank-like General Motors Hummer is expected to be particularly popular during the transition period. Canada's Trade Minister Pierre Pettigrew immediately hailed the WTO's decision as "a victory for free trade." When asked about the expense of forcing an entire country to drive on the opposite side of the road, Pettigrew pointed to the long-run efficiency gains that theoretically should result from free trade. "Sure, there will be short-run adjustment costs," Pettigrew admitted, referring to the temporary incidence of head-on crashes and other problems. "But in the long-run, the Japanese will thank us for this. They can now stop driving on the wrong side of the road, and start to focus their skills and resources in those industries where they are more efficient." Emboldened by the WTO decision, foreign automakers plan to launch other complaints about Japanese trade practices. Sources within the industry hint that the next WTO challenge may target the unfair use of the Japanese language. "Japanese customers can hardly make sense of North American owner's manuals," complained one Detroit-based auto analyst. "They're much less likely to buy a vehicle when they can't figure out how to make it work." It is widely expected that Japan will resist WTO demands to abolish the Japanese language by claiming a cultural exemption to normal trade rules. But the WTO official scoffed at that prospect. "There's even less genuine cultural value to a Japanese-language owner's manual than there is in the Canadian edition of Reader's Digest," he said. Meanwhile, officials in China's trade ministry expressed pleasure with the WTO decision, suggesting that it enhances the likelihood that China will be admitted to the world trading club within the next year or two. "Sure, our country is still nominally run by Communists," said the official. "But we drive on the right side of the road. This clearly indicates our readiness to accept the discipline of world market forces." The implications of the WTO ruling on traffic laws may even extend to completely separate industries. An association representing U.S. beef growers, for example, is already discussing plans to launch a trade challenge against the Japanese sushi industry, based on the precedent created by the traffic law case. "Japanese consumers are indoctrinated to eat raw fish from the time they are toddlers. No wonder they won't buy our meat," complained one beef lobbyist. "That's completely unacceptable." The beef challenge may be backed by powerful support from the pharmaceutical industry, which has long complained of a lack of demand in Japan for U.S.-made cholesterol-reduction drugs. This latest decision represents another expansion in the scope and breadth of the WTO's dispute-settlement system. What was initially intended as a means of arbitrating relatively narrow and arcane questions of trade law, has evolved into an authority with the mandate to challenge any law, policy, or practice found to inhibit the preeminent goal of expanded world trade. The worldwide economic and cultural harmonization thus being encouraged by the dispute-settlement mechanism is a normal side-effect of globalization, explained a top U.S. trade official assigned to the WTO. "Basically, it won't stop until foreigners finally start to think like Americans, act like Americans, and-most of all-shop like Americans." When not reporting on WTO decisions from Geneva, Jim Stanford is an economist with the Canadian Auto Workers. ====================================================== _______ Macdonald Stainsby. 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