The European Community yesterday rejected Belgian and Dutch demands to increase the import tariff on Japanese compact discs from 9.5 percent to 19 percent. This was revealed at a meeting of EC foreign ministers. Opposition from West Germany and Denmark yesterday resulted in the European Commission, the EC's executive board, being allowed to open only exploratory talks on the matter with Japan. Belgium and the Netherlands, usually very tough defenders of free trade, acquiesced.
The request to protect the market came from the Belgian branch of Philips and received Dutch support. Indeed, the Hasselt-based company (province of Limburg) is preparing to launch the compact disc on the European market in April.
The problem, however, is that Japanese licensees (of the Philips system) are already planning to do so in March. The compact disc is a playback device for records in which the record is no longer read by a needle but by a concentrated beam of laser beams.
The European Commission had proposed creating temporary market protection under Article 28 of the Gatt -the International Agreement on Trade and Tariffs. Under this article, it is possible to increase import duties on a product provided that at the same time the aggrieved country (Japan) is compensated elsewhere.
However, West Germany and Denmark are not in favor of dealing with Japan through separate incidents and prefer to include the compact disc problem in the general relationship between the EC and Japan. In the course of the week, EC Commissioners Davignon (industry) and
Haferkamp (external relations) will leave for Tokyo for the usual semi-annual consultations. This will certainly include discussion of the EC's other proceedings against Japan.