Japan urged South Korea on Tuesday to immediately remove its anti-dumping tariff on Japan-made stainless steel bars after a World Trade Organization dispute settlement panel decision said an extension of the protections would be a contravention of WTO rules.
In a report dated Monday, the panel said Japanese-made bars are priced higher than those made by South Korean companies, siding with the Japanese claim that imported products cause no damage to the domestic industry.
The report also pointed out that there is a "large volume" of Chinese products already on the market at a "low price."
It called on South Korea to take remedial measures based on the decision.
"We strongly urge South Korea to abolish the tariff, recognized as against the WTO agreement, in accordance with the decision," Chief Cabinet Secretary Katsunobu Kato said at a news conference in Tokyo.
The panel's ruling could add fuel to tensions between Japan and South Korea, worsening a relationship that has seen the neighbors at odds over wartime labor compensation and Tokyo's imposition of tighter export controls.
South Korea began imposing a 15.39 percent tariff on Japan-made stainless steel bars in July 2004 and decided to extend the measure for the third time in June 2017, prompting Tokyo to lodge a complaint with the WTO in June 2018. The panel was set up four months later as bilateral consultations failed.
South Korea's anti-dumping duty on Japanese stainless steel bars, used to make bolts, nuts and valves for machinery and cars, totaled about 6.9 billion yen ($66 million) by the end of 2019, according to the Japanese Ministry of Economy, Trade and Industry.
The volume of stainless steel bar exports from Japan to South Korea decreased by approximately 60 percent since anti-dumping duties were imposed. In 2019, 3,791 tons were exported from Japan compared to 9,269 tons in 2002.
A country is allowed to impose an anti-dumping tariff for five years when it judges that an imported product is priced at an artificially deflated level compared with how it is priced in its home market. Such a measure can be extended as an exception if it is feared that lifting it would hurt the domestic industry.