Global Steel Trade; Structural Problems and Future Solutions

The Product Certification System
Adding to the problem of finding a willing customer, a foreign producer must also wade through official
Japanese certification requirements for steel—an often lengthy and frustrating process. Japanese Industrial
Standard (JIS) certifications are national standards for industrial and mineral products. As a business
reality in the steel industry, anyone wishing to sell in Japan must meet these standards. MITI handles
applications for JIS approval for foreign producers.
The approval process for JIS certifications on trade with Japan has been a long-standing complaint among
foreign producers trying to export to Japan. Given the international rules governing certifications and
Japan’s harmonization of its certification standards with those rules, 60 in theory it should be as easy for a
foreign producer to get JIS approval as it is for a domestic producer. But according to U.S. mills who have
been through the process, acquiring JIS approval has not been easy.
While the Japanese government has maintained in recent bilateral discussions with the United States that
any such problems are out-of-date, discussions with steel producers for this report suggest that the
certification process continues to serve as an impediment to imports.
One recent complaint relayed by a U.S. producer involved JIS approval. According to company officials,
the producer was granted approval on its first mill only because the mill manufactured a product that was
considered unlikely to be exported to Japan. Even so, the approval process took one year. When the
company built an additional facility that manufactured products more likely to be exported to Japan, MITI
indicated that the company would have to reapply for JIS certification for that facility. Despite already
having JIS certification for its first mill, approval for the additional facility took twice as long. According
to U.S. company officials, the product manufactured at the additional facility was considered a threat to the
Japanese domestic market and for this reason, JIS approval was delayed. 61
Apparent Arrangements Between Japanese Producers
and EU and Korean Producers
For many years, U.S. steel producers and others have claimed that Japanese producers have entered into
informal arrangements with certain foreign producers to limit access to each others’ markets. The best known
of these alleged arrangements is the “East of Burma” Agreement, between Japanese and European mills.
While the existence of these arrangements is routinely denied by both Japanese steel producers and the
Japanese government, 62 there is information that market-sharing arrangements have existed between the
Japanese and the EU steelmakers well into the 1990s. In a 1999 decision, the European Commission found
that major Japanese and European steelmakers had engaged in cartel activity for the sale of seamless pipe.
The finding covered an arrangement among four major Japanese producers, including Nippon Steel, and four
European counterparts, to restrict sales in each others’ markets from 1990 through 1995. As reported by the
Nihon Keizai Shimbun, “What the EU sees as problematic in this case is [the eight steelmakers] dividing up
of the market. The British, French, German, Italian and Japanese manufacturers conspired to refrain from
selling in each others’ national markets. They are said to have split up Europe, which is supposed to be a
single market, and restricted competition.” 63 In addition to this formal cartel finding, there is also substantial
anecdotal evidence from traders that quotas continue in force.
• One trader has stated that “the Japanese will not sell into Europe’s market for fear that the European
mills will sell directly into the Japanese domestic market in return.” 64
• Another trader, in a November 1999 response to a sales inquiry, stated that the “Gentlemen’s agreement
between EU-Japan/Korean mills are still effective, but even under the agreement nominal tonnage can
be allowed.” 65
Chapter 3: Behind the Crisis—Japan 77