(Japanese Note)

　Washington, D. C., February 14, 1990

　Excellency,
I have the honor to refer to the recent discussions held between the representatives of the Government of Japan and the Government of the United States of America concerning trade in certain steel products between Japan and the United States of America and to confirm, on behalf of the Government of Japan, the under standing reached between the two Governments that, with a view to restructuring the United States steel industry, the Government of Japan will implement the measures provided for in the arrangement attached hereto (hereinafter referred to as "the Arrangement").

　I have further the honor to request you to confirm on behalf of the Government of the United States of America that it will implement its measures provided for in the Arrangement and to confirm that the present Note and your reply shall be regarded as constituting an agreement between the two Governments.

　I avail myself of this opportunity to renew to you, Excellency, the assurances of my highest consideration.

　(Signed) Ryohei Murata
Ambassador Extraordinary
and Plenipotentiary of Japan

　His Excellency
Julius L. Katz
Acting United States Trade Representative
of the United States of America

ARRANGEMENT

　Between the Government of Japan and the Government of the United States of America Concerning Trade in Certain Steel Products

　Recognizing the United States policy for the steel industry, and related authority, and the policy of the Government of Japan to cooperate with such policy;

　Recognizing the spirit of cooperation in which the Government of Japan and the Government of the United States of America have consulted in the past to resolve problems in steel trade, and noting that the Government of Japan has agreed to restrain voluntarily certain steel exports to the United States of America;

　Recognizing the policy of both Governments that the adjustment and modernization of their steel industries should maximize reliance on market forces;

　Recognizing the continued importance of efforts made by the Government of the United States of America to facilitate the United States steel industry's adjustment and modernization;

　Recognizing that it is the mutual concern of both Governments to contribute, by multilateral agreement and other means, to the orderly transition to restore fair and open steel trade;

　Recognizing the policy of both the Japanese and United States steel industries to maintain fair trade practices:

　Recognizing the positive contributions of mutual industrial cooperation;

　And recognizing, therefore, the importance of stability in trade for a certain period of time in certain steel products between Japan and the United States of America;

　The Government of Japan and the Government of the United States of America have agreed as follows:

1. Basis and Objective of the Arrangement

(a) The objective of the Arrangement is to create a period of trade stability in order to facilitate the modernization of the United States steel industry. To this effect, the Government of Japan shall restrain exports to or destined for consumption in the United States of America of products described in sub-paragraph (a) of paragraph 3 originating in Japan (such products hereinafter called "the Arrangement products") for the period of October 1, 1989, through March 31, 1992.

(b) The basis of the Arrangement is such joint efforts under taken by the Government of Japan and the Government of the United States of America aimed at the elimination and prevention of trade distortive practices through bilateral and ultimately multilateral framework on steel trade liberalization, as described in the Framework on Steel Trade Liberalization between the Government of Japan and the Government of the United States of America, dated February 14, 1990.

2. Conditions

(a) If, during the period in which the Arrangement is in effect, any petition seeking import relief under United States law, including Section 337 of the Tariff Act of 1930 *. Section 201-203 of the Trade Act of 1974, Section 301-310 of the Trade Act of 1974 (other than Section 301 petitions relating to third country sales by United States exporters), or Section 23 of the Trade Expansion Act of 1962, all as amended, is filed or investigations are initiated or litigation (including antitrust litigation) is instituted with respect to the Arrangement products, the Government of Japan shall be entitled to terminate the Arrangement with respect to some or all of the Arrangement products that are the subject of the petition, investigation or litigation after consultations with the Government of the United States of America, at the earliest 15 days after such consultations.

　* With respect to any Section 337 investigation, the two Governments shall consult to determine whether the basis for the investigation is duplicative of this Arrangement. A Section 337 investigation which involves intellectual property rights would not be considered duplicative of this Arrangement.

　In the case of antidumping or countervailing duty investigations, the Government of Japan shall be entitled to terminate the Arrangement with respect to some or all of the Arrangement products that are the subject of the investigation after consultations with the Government of the United States of America, at the earliest 15 days after the issuance of a preliminary Department of Commerce determination or the conclusion of such consultations, whichever is later.

(b) In addition, if, during the consultations, it is determined that the petition (which would be duplicative of this Arrangement), investigation or litigation threatens to impair the attainment of the objectives of the Arrangement, the Government of Japan shall be entitled to terminate the Arrangement with respect to some or all of the Arrangement products, at the earliest 15 days after such consultations.

(c) These consultations will take into account the nature of the petition, investigation or litigation, the identity of the petitioner or litigant, the amount of trade involved, the scope of relief sought, and other relevant factors.

3. Product Description

(a) The Arrangement products are:

　Sheet and Strip

　Cold-rolled Sheet and Strip

　Coated Sheet

　Electro - galvanized

　Electrical Sheet and Strip

　Tin Plate

　Tin-Free Steel

　Plate

　Structurals

　Rails and Rail Products

　Bar

　Cold-finished Bar

　Stainless Bar

　Pipe and Tube

　Oil Country Tubular Goods (OCTG)

　Line Pipe

　Structural Pipe and Tube

　Wire Rod, Wire and Wire Products

　Carbon and Alloy Wire Rod

　Stainless W ire Rod

　Alloy Tool Steel

　Fabricated Structurals

　Semi-finished Products

　Wire Rope and Strand

　as described and classified in Appendix A by reference to corresponding Harmonized Tariff Schedules of the United States (HTS) item numbers and Japanese export classification numbers. All products classified in each covered HTS item number by the United States Customs Service are subject to the Arrangement.

(b) The numbers referred to in sub-paragraph (a) above are subject to revision when the Government of Japan or the Government of the United States of America adopts modifications to the applicable import or export nomenclatures. when such modifications are adopted, prior notification shall be given.

4. Export Ceilings

(a) For the period October 1, 1989 through December 31, 1990 (hereinafter called "the Initial Period"), and for the period January 1, 1991 through March 31, 1992 (hereinafter called "the End Period"), export licenses and certificates shall be required for the Arrangement products. However, products, which did not require an export license and certificate under the Arrangement between the Government of Japan and the Government of the United States of America Concerning Trade in Certain Steel Products, dated May 14, 1985 (hereinafter referred to as "the 1984-1989 Arrangement"), exported from Japan on or after October 1, 1989 and prior to February 14, 1990, may be admitted without an export license and certificate. Such licenses and certificates shall be issued to Japanese exporters for each of the following product categories and sub-categories (hereinafter called "categories" and "sub-categories" respectively) in quantities no greater than the following percentages of the projected United States apparent consumption for each category and sub-category (hereinafter called "export ceilings") for the relevant period:

　Category and Initial Period End Period Sub-category Export Ceiling Export Ceiling

　Sheet and Strip 5.73% 6.09%

　Cold-rolled Sheet and Strip 4.59% 4.87%

　Coated Sheet 11.69%-12.05%

　Electro-galvanized 16.39% 16.82%

　Electrical Sheet and Strip 6.67% 7.09%

　Tin Plate 5.79% 6.15%

　Tin-Free Steel 6.62% 7.03%

　Plate 0.99% 1.05%

　Structurals 7.11% 7.55%

　Rail and Rail Products 9.56% 10.15%

　Bar 0.60 % 0.64%

　cold-finished Bar 2.00% 2.13%

　Stainless Bar 10.47% 10.47%

　Pipe and Tube 8.65% 9.19%

　Oil Country Tubular Goods 9.66% 9.66% (OCTG)

　Line Pipe 15.52% 16.48%

　Structural Pipe and Tube 12.00% 12.76%

　Wire Rod, Wire and Wire 6.03% 6.40%

　Products

　Carbon and Alloy wire Rod 5.93% 6.30%

　Stainless Wire Rod 10.44% 10.44%

　Alloy Tool Steel 5.89% 5.89%

　Semi-finished Products* 0.088% 0.088%

　wire Rope and Strand subject to special monitoring

　* Export Ceiling for semi-finished products is expressed as a percentage of total apparent consumption for basic steel mill products.

　The tonnage of the Arrangement products which did not require an export license and certificate under the 1984-1989 Arrangement, that are exported on or after October 1, 1989 and prior t9 February 14, 1990 without a certificate from Japan to or destined for consumption in the United States of America shall be counted towards the Initial Period export ceiling for each category and sub-category. The tonnage so exported shall be determined on the basis of United States import data sorted by export date. Date of export for pre-certificated shipments under the Arrangement will be that established by the United States Customs Service. Date of export for all other shipments exported under the provisions of the Arrangement will be that established by Japanese Customs at the time of exportation. No later than June 1, 1990, the Government of the United States of America will notify the Government of Japan of the amount of tonnage exported on or after October 1, 1989 without a certificate. To the extent that export licenses and certificates have already been distributed in such a way as to cause Japanese exports to exceed the agreed export ceilings for the Initial Period, the overage that has not yet been accounted for will be subtracted from the export ceilings for that category or sub-category in the End Period.

　For purposes of the Arrangement, "United States apparent consumption" shall equal shipments (deliveries) minus exports, plus imports, as described in Appendix B.

(b) For the Initial Period and the End Period, export licenses and certificates shall be required for fabricated structurals. Export licenses and certificates shall be issued to Japanese exporters of fabricated structurals in quantities not greater than:

　Initial Period End Period
(metric tons)

　Fabricated Structurals 63,066

　Welded H-Beams 37,500 37,500

(c) Where the Arrangement products imported into the United States of America are subsequently re-exported there from, without having been subject to substantial transformation, the export ceilings for such products for the period corresponding to the time of such re-export shall be increased by the same amount.

(d) Where the Arrangement products imported into the United States of America are subsequently re-exported therefrom in the form of Arrangement products, and have been subject to double substantial transformation, as referred to in Appendix C, the export ceilings for such imported Arrangement products for the period corresponding to the time of such re-export of the doubly substantially transformed Arrangement products shall be increased by the same amount as the re-export tonnage of the doubly substantially transformed Arrangement products, up to a maximum of 200,000 metric tons.

　For purposes of this paragraph, tolling means importing a raw material, processing it into another product, and exporting the finished product. Both the imported and exported product must be covered by the Arrangement. The definition of tolling will be consistent with the rulings made by the United States Customs Service concerning successive substantial transformations.

(e) For purposes of the Arrangement, the United States of America shall comprise both the United States Customs Territory and United States Foreign Trade zones, and entry of merchandise into the United States of America shall include admission of merchandise into a Foreign Trade Zone. In consequence the importation into the United State s Customs Territory of the Arrangement products which have already entered into a Foreign Trade Zone shall not then again be taken into account as imports of the Arrangement products.

5. Calculation and Revision of United States Apparent Consumption Forecast and of Export Ceilings

(a) The Government of the United States of America, with advice from the Government of Japan, will select an independent forecaster which will provide the estimate of United States apparent consumption for purposes of the Arrangement. A first projection of United States apparent consumption for the Initial Period for each category and sub-category listed in sub-paragraph (a) of paragraph 4 will be established as early as possible and in any event before February 14, 1990.

(b) The figures for projected Initial Period United States apparent consumption will be revised in February, May, August and October of 1990 by the independent forecaster, and appropriate adjustments will be made to the export ceilings for each category and sub-category taking into account licenses already issued. Export ceilings calculated for the Initial Period based on the May, August and October 1990 forecasts will use actual October through December 1989 United States apparent consumption.

　For the End Period, a first projection of United States apparent consumption by category and sub-category will be established by October of 1990. These figures will be revised in December 1990 and February, May, August, October, and December of 1991.

(c) By May 1 of 1991, adjustments to the End Period export ceiling for each category and sub-category will be made for differences between the forecasted United States apparent consumption and actual United States apparent consumption of that category or sub--category in the Initial Period.

6. Export Licenses and Certificates

(a) The Government of Japan will require an export license and certificate for all Arrangement products, publishing appropriate decisions and regulations. Such export licenses and certificates will be issued so that no more than 48 percent of allowable Japanese exports of any category or sub-category will be shipped to the United States of America in any two consecutive quarters without the prior agreement of the Government of the United States of America. The Government of Japan shall take action, including the imposition of penalties, as may be necessary to make effective the obligations resulting from the Arrangement. The Government of Japan will inform the Government of the United States of America of any violations concerning the export licenses and certificates which come to its attention and the action taken with respect thereto.

　The Government of the United States of America will inform the Government of Japan of violations concerning the export licenses and certificates which come to its attention and the action taken with respect there to. Export licenses will provide that shipment must be made within a period of three months or less.

　Export licenses will be issued against the export ceiling for the Initial Period or the End Period.

　Export licenses for the End Period may be used as early as November 15, 1990 of the initial Period within a limit of 6.4 percent of the unadjusted export Ceiling for the given period. Each such advance use license and certificate derived therefrom shall be so marked. Export licenses for the Initial Period may not be used after December 31, 1990 of the Initial Period, except that licenses not so used may be used during the first two months of the following period, up to a maximum of 6.4 percent of the unadjusted export ceiling for the given period. Each such carryover license and certificate derived therefrom shall be so marked.

　The Government of Japan and the Government of the United States of America may increase the above percentage limits by mutual agreement.

(b) The Government of Japan will require that the Arrangement products shall be issued a certificate substantially in the form set out in Appendix D, endorsed in relation to a license. The certificate must contain a stamp of the Government of Japan or organizations designated by the Government of Japan indicating the day, month, and year in which the Arrangement products were exported, the category, and tonnage exported, If any of this information is in a language other than English, the certificate must also contain an English language translation of this information.

　The Government of the United States of America shall require presentation of such certificate as a condition for entry into the United States of America of the Arrangement products. The Government of the United States of America shall prohibit entry of such products not accompanied by such a certificate.

7. Technical Adjustments

(a) Export ceilings for specific categories may be adjusted by the Government of Japan with the agreement of the Government of the United States of America. Adjustments to increase the volume of one category must be offset by an equivalent volume reduction for another or other categories for the same period. Notwithstanding the preceding sentences no adjustment may be made under this paragraph which results in an increase or a decrease in a specific category export ceiling by more than five (5) percent by volume of the unadjusted export ceilings for the relevant period. The Government of Japan and the Government of the United States of America may agree to increase the above percentage limit.

(b) Export ceilings for specific sub-categories may be adjusted by the Government of Japan as herein provided. Adjustments to increase the volume of one sub-category must be offset by an equivalent volume reduction in other products within the same category. Notwithstanding the preceding sentences, no adjustment may be made under this paragraph which results in an adjustment in a specific sub-category export ceiling by more than seven (7) percent by volume of the unadjusted export ceilings for the relevant period. The Government of Japan and the Government of the United States of America may modify the above percentage by mutual agreement. Each license and certificate for such adjusted volumes shall be so marked.

8. Short Supply

(a) If the Government of the United States of America in consultation with the Government of Japan determines that because of abnormal supply or demand factors, the United States steel industry will be unable to meet demand in the United States of America for a particular product (including substantial objective evidence such as allocation, extended delivery periods, or other relevant factors), an additional tonnage shall be allowed for such product by a special issue of licenses.

(b) Requests for short supply should at a minimum contain the information described in Appendix E. The Government of the United States of America shall, within a maximum of 30 days from the date of the request for consultations unless it is determined that the case is extraordinarily complicated, make a determination under this paragraph through a transparent procedure on the basis of objective evidence from all relevant sources.

(c) Each authorized special issue export license and certificate derived therefrom shall be so marked. Each such license must be used within 90 days after the date of the authorization of the special issuance unless the Government of the United States of America agrees to extend.

9. Monitoring

(a) The Government of Japan will, within one month of the end of each quarter, or upon request, supply the Government of the United States of America with such non-confidential information on all export licenses and certificates issued for the Arrangement products as is required for the proper functioning of the Arrangement. This information will include at a minimum each license number, certificate number, quantity, date of export and category or sub-category written in English.

(b) The Government of the United States of America will collect and transmit quarterly, or upon request, to the Government of Japan all non-confidential information relating to certificates received during the preceding quarter in respect of the Arrangement products. The Government of the United States of America will also collect and transmit non-confidential information relating to actions taken in respect of the Arrangement products for violations of United States Customs Law.

10. Consultations

(a) Consultations shall take place between the Government of Japan and the Government of the United States of America on matter arising out of the operation of the Arrangement.

(b) Consultations shall be held at any time at the request of either the Government of Japan or the Government of the United States of America.

(c) Consultations shall also be held if there are indications that imports from third countries of steel products are displacing imports from Japan.

11. Third Country Equity

　If the Government of Japan considers that, as a result of the application of the provisions of the Arrangement, Japan is placed in an inequitable position vis-a-vis third countries with respect to imports of steel products into the United States of America, the Government of Japan may request consultations with the Government of the Units States of America.

12. Shifts in products Mix

　If imports from Japan of a product within a category or a sub-category show a significant increase indicating a major shifting of product mix within the same category or sub-category consultations will be held promptly upon request between the Government of Japan of the United States of America with the objective of working out a mutually satisfactory solution and reaching agreement on preventing such shifting.

　Should these consultations demonstrate that there has indeed been a shifting of product mix within category which is such as to impair the attainment of the objective of the Arrangement, then both Governments shall take the necessary measures for the product concerned in order to prevent such shifting. Such measures may include the creation of a new sub-category. For purposes of paragraph 4, the percentage or allowable tonnage for the new sub-category shall reflect the market share or tonnage indicated in Appendix F.

13. Relations With the GATT

　The two Governments recognize that their rights and obligations under the General Agreement on Tariffs and Trade (GATT) are not affected by the Arrangement.

14. Implementation

　The provisions of the Arrangement will be implemented by the two Government in accordance with the laws and regulations in force in their respective countries

　
Footnotes:
1/ Excluded If "tool steel", "chipper knife steel". or "ball-bearing", as defined in Additional Note 1(e),(f), and (h) to Chapter 72 of the HTS.

2/Excluded if "carbon/alloy band saw steel" defined as follows:

(a) "metal Cutting band saw steel" referring to steel flat-rolled products, not less than 0.61mm and not more than 0.9mm in thickness, not less than 6.3mm and not more than 50.80mm in width, in Coils, containing:

　carbon: not less than 1.18 percent and not more than 1.32 percent,

　chromium: not less than 0.15 percent and not than 0.32 percent,

　manganese: not less than 0.10 percent and not than 0.40 percent,

　certified by the importer of record or the ultimate consignee for use in the manufacture of metal cutting band saw blades; or (b) "wood band saw steel" referring to (1) alloy steel flat-rolled products less than 4.75mm in thickness which contain, in addition to iron, each of the following elements by weight in the amount specified:

　carbon: not less than 0.70 nor more than 0.81 percent;

　manganese: not less than 0.30 nor more than 0.55 percent;

　silicon: not less than 0.20 nor more than 0.35 percent;

　nickel: not less than 1.60 nor more than 2.70 percent;

　chromium: none, or not more than 0.50 percent;

　phosphorous: none, or not more than 0.03 percent; and

　sulfur; none, or not more than 0.15 percent;

　or
(2) cold-rolled flat-rolled products less than 4.75mm in thickness, less than 300mm in width, which contain, in addition to iron, each of the following elements by weight in the amount specified:

　carbon: not less than 0.70 nor more than 0.81 percent:

　manganese: not less than 0.30 nor more than 0.50 percent;

　silicon: not less than 0.20 nor more than 0.35 percent;

　chromium: none, or not more than 0.50 percent: and

　phosphorus: none, or not more than 0.03 percent: and

　sulfur: none, or nor more than 0.15 percent,

　certified by the importer of record or the ultimate consignee for use in the manufacture of wood band saws.

3/ Excluded if "razor blade steel," i. c., flat-rolled products or stainless steel not over 0.25mm in thickness and not over 23mm in width, containing by weight not over14.7 percent of chromium, and certified at the time of entry to be used in the manufacture of razor blades.

4/ Excluded if thumb tacks; fasteners suitable for use in powder-actuated hand-tools; corrugated fasteners; glaziers' points; hook nails; ring nails; and cut products of one-piece construction made from other than round wire.

5/ Excluded if cladding grade 434 stainless steel certified by the importer of record to be used in the manufacture of stainless steel clad aluminum automobile trim.

6/ Excluded if door and window frames.

7/ Excluded if stainless steel flat-rolled products less than 4.75mm in thickness and over 1,803.4mm in width.

8/ Excluded if stainless steel flat-rolled products less than 4.75mm in thickness, less than 300mm in width, and certified by the importer of record or ultimate consignee to be used in the manufacture of stainless steel flapper valves for compressors.

9/ Excluding 7308.90.9090 if certified by the importer of record or the ultimate consignee for the use of offshore oil or natural gas drilling and production platforms.

10/ Covered if made of iron or steel.

11/ Excluded if covered with textile or other nonmetallic material.

12/ Excluded if loosely twisted double wire.

13/ Covered if loosely twisted double wire.

14/ Excluded if columns, pillars, post, beams, girders, and similar structural units made in part of stainless steel, or of cast-iron.

15/ Excluded if razor blade steel, less than 300mm in width and 0.25mm or less in thickness.

16/ Excluded if tool steel other than ball-bearing steel.

17/ Excluded if tool steel other than ball-bearing steel and less than 4.75mm in thickness.

18/ Covered if tool steel and 4.75mm or more in thickness.

19/ Covered if axles and parts thereof, wheels and parts thereof, or such wheels or parts with axles fitted in then.

20/ Covered if cold-formed.

21/ If other than tool steel, covered if not cold-formed.

22/ Covered if tool steel other than ball-bearing steel and less than 4.75m in thickness.

23/ Covered if tool steel other than ball-bearing steel.

24/ Covered if not cold-formed.

25/ Covered if 4mm or more in wall thickness.

26/ If 1.65mm or more in wall thickness, Covered if tapered steel pipe and tubes principally used as parts of illuminating articles.

27/ Covered if conduit tubing.

28/ Covered if tool steel other than ball-bearing steel and chipper knife steel.

29/ Excluded if drill pipe used in drilling for earth, minerals, or ores.

30/ Excluded if of brass-plated wire, or if fitted with fittings or made up into articles.

31/ Excluded if tire cord, made of brass-plated wire, or fitted with fittings or made up into articles.

32/ Excluded if suitable for use in boilers, superheaters, heat exchangers, condensers, refining furnaces and feedwater heaters.

33/ Excluded if 4mm or more in wall thickness.

34/ If 1.65mm or more in wall thickness, excluded if tapered steel pipe and tubes principally used as parts of illuminating articles.

35/ Covered if plated or coated with metal and not cold-formed.

36/ Excluded if plated or coated with metal and not cold-formed.

37/ Covered if suitable for use in boilers, superheaters, heat exchangers, condensers, refining furnaces and feedwater heaters.

38/ Excluded if less than 1.65mm in wall thickness. Also, excluded if 1.65mm or more in wall thickness and either a) cold-drawn, b) cold-rolled with wall thickness not exceeding 2.54mm, or c) tube or pipe hollows for redrawing of outside diameter not exceeding 114.3mm.

39/ Covered if less than 1.65mm in wall thickness. Also, covered if 1.65mm or more in wall thickness other than tapered steel pipes and tubes principally used as parts of illuminating articles, and either a) cold-drawn, b) cold-rolled with wall thickness not exceeding 2.45mm, or c) tube or pipe hollows for redrawing of outside diameter not exceeding 114.3mm.

40/ Covered if other than wire strand.

41/ Covered if wire strand.

Additional Notes
　Products Description-Harmonized Tariff Schedule of the United States Chapter72 (Iron and Steel)

1. (e) Tool steel

　Alloy steels which contain the following combinations of elements in the quantity by weight respectively indicated:

(1) more than 1.2 percent carbon and more than 10.5 percent chromium: or

(2) not less than 0.3 percent carbon and 1.25 percent or more but less than 10.5 percent chromium; or

(3) not less than 0.35 percent carbon and 1 percent to 1.8 percent, inclusive, manganese; or

(4) 0.9 percent to 1.2 percent, inclusive, chromium and 0.9 percent to 1.4 percent, inclusive, molybdenum; or

(5) not less than 0.5 percent carbon and not less than 3.5 percent molybdenum; or

(6) not less than 0.5 percent carbon and not less than 5.5 percent tungsten.

(f) Chipper knife steel

　Alloy tool steel which contain, in addition to iron, each of the following elements by weight in the amount specified:

(1) not less than 0.48 nor more than 0.55 percent of carbon;

(2) not less than 0.2 nor more than 0.5 percent of manganese;

(3) not less than 0.75 nor more than 1.05 percent of silicon;

(4) not less than 7.25 nor more than 8.75 percent of chromium;

(5) not less than 1.25 nor more 1.75 percent of molybdenum;

(6) none, or not more than 1.75 percent of tungsten; and

(7) not less than 0.2 nor more than 0.55 percent of vanadium.

(h) Ball-Bearing steel

　Alloy tool steel which contain, in addition to iron, each of the following elements by weight in the amount specified:

(1) not less than 0.95 nor more than 1.13 percent of carbon;

(2) not less than 0.22 nor more than 0.48 percent of manganese;

(3) none, or not more than 0.03 percent of sulfur;

(4) none or not more than 0.03 percent of phosphorus;

(5) not less than 0.18 nor more 0.37 percent of silicon;

(6) not less than 1.25 nor more than 1.65 percent of chromium;

(7) none, or not more than 0.28 percent of nickel;

(8) none, or not more than 0.38 percent of copper; and

(9) none, or not more than 0.09 percent of molybdenum.

APPENDIX C
　Examples of tolling, which involves double substantial transformation, include:

　Imported Product Exported Product

　Slab                         Cold Rolled Sheet

　                             Coated sheet

　                             Pipe

　Hot Rolled Sheet or Band     Coated Sheet

　                             Galvanized Pipe

　Cold Rolled sheet            Galvanized Pipe

　Billet                       certain Wire

　                             Wire Products

　                             Rope or strand

　                             Cold Finished Bar

　Wire Rod                     certain wire Products

　                             Rope or Strand

　Blooms                       Fabricated Structurals

Note: While it is expected that the double substantial transformation list above will constitute the majority of cases that occur, there are other situations that may qualify as double substantial transformations.

APPENDIX E
I. If the requestor of short supply is a foreign company through its government, the request should include as a minimum the following:

　o Exact specifications of the product for which the request is made, including dimensions, metallurgical specifications, and characteristics that make the product unique.

　o A list of all U. S. customers of the product for which the request is made, along with documentation from U. S. customers that they have been unable to buy the product domestically and support this request.

　o Detailed explanation of how the product will be used by U. S. customers.

　o Information explaining why the requestor believes the product is in short supply. (e. g. U. S. mills cannot meet certain specifications deemed necessary by U. S. customers  U. S. mills high operating rates and extended deliveries suggest limited or unavailable supplies).

　o Exact quantity of product included in request is for more than one type and size of a prod quantity information for each type and size must be provided.

　o Time period of request.

　o A list of all of that foreign company's sales (by quantity) to U. S. customers of the product for which the request is made in each of the last three years. If quantity sought in current request represents an increase over the previous years, a detailed explanation justifying the increase is needed.

II. If the requestor of short supply is a U.S. company that Processes the steel product in some manner, the request should include as a minimum the following:

　o Exact specifications of the product for which the request is made, including dimensions. metallurgical specifications, and characteristics that make the product unique.

　o Detailed explanation of how the product will be used.

　o information explaining why the requestor believes the product it in short supply, (e. g. U. S. mills cannot meet certain specifications deemed necessary, U. S. mills high operating rates and extended deliveries suggest limited or unavailable supplies).

　o A list of all U. S. and foreign producers of the product for which the request is made that have refused to sell the product in the past three years, indicating when they were contacted and the reason for their refusal.

　o A list of all offers by U. S. and foreign producers in the past three years of the product for which the request is made that have been rejected by the requestor, indicating the reasons for the rejection.

　o Exact quantity of product included in request. If request is for more than one type and size of product, specific quantity information for each type and size must be provided. If requested level in current request represents an increase, a detailed explanation justifying the increase is needed.

　o Time period of request.

　o Traditional suppliers of the product for each of the past three years, both domestic and foreign, with quantity purchased from each mill during this period.

　o Documentation indicating that requestor has made efforts to buy the product domestically.

　o A list of potential foreign suppliers for the product.

III. If the requestor of short supply is an importer/distributor, the request should include as a minimum the following:

　o Exact specifications of the request is made, including dimensions. Metallurgical specifications, and characteristics that make the product unique.

　o A list of all U. S. customers of the product for which the request is made, along with documentation from U. S. customers that they have been unable to buy the product domestically and support this request.

　o Detailed explanation of how the product will be used by U. S. customers.

　o Information explaining why the requestor believes the product is in short supply. (e. g. U. S. mills can not meet certain specifications deemed necessary by U. S. customers, U. S. mills high operating rates and extended deliveries suggest limited or unavailable supplies).

　o Exact quantity of product included in request. If request is for more than one type and size of a product, specific quantity information for each type and size must be provided.

　o Time period of request.

　o A list of all sales (by quantity) to U. S. customers of the product for which the request is made in each of the last three years. If quantity sought in current request represents an increase over the previous years, a detailed explanation justifying the increase is needed.

　o Traditional suppliers of the product for each of the past three years, both domestic and foreign, with quantity purchased from each mill during this period.

　o A list of potential foreign suppliers for the product.

APPENDIX F
　Candidates Benchmarks

　(percent)

　Cold-rolled sheet 4.74

　Cold-rolled strip 3.24

　Stainless sheet and strip 3.67

　Stainless plate 1.82

　Alloy plates 1.51

　Small bar shapes 2.78

　Carbon hot-finished bar 1.61

　Alloy hot-finished bar 2.02

　Standard pipe 5.47

　Mechanical tube 4.39

　Pressure tube 10.90

　Stainless pipe and tube 16.56

　Carbon and alloy wire 9.88

　Stainless wire 9.40

　Other wire products, NES 4.77

(U. S. Note)

　Washington, D. C., February 14, 1990

　Excellency,
I have the honor to acknowledge the receipt of your Note of today's date, enclosing the arrangement attached thereto (hereinafter referred to as the "Arrangement") concerning trade in certain steel products between Japan and the United States of America, which reads as follows:

"(Japanese Note)"

　I have further the honor to confirm on behalf of the Government of the United States of America that it will implement its measures provided for in the Arrangement and to agree that your Note and this reply shall be regarded as constituting an agreement between the two Governments.

　I avail myself of this opportunity to renew to you, Excellency, the assurances of my highest consideration.

　(Signed) Julius L. Katz
Acting United States Trade Representative
of the United States of America

　His Excellency
Ryohei Murata
Ambassador Extraordinary
and Plenipotentiary of Japan

AGREED MINUTES

　The representatives of the Government of Japan and the Government of the United States of America wish to record the following understandings in reference to the Arrangement on Certain Steel Products between the Government of Japan and the Government of the United States of America.

1. With respect to the phrase "destined for consumption" in paragraph 1 and 4 of the Arrangement, while both the Government of Japan and the Government of the United States of America agree that all the Arrangement products originating in Japan are subject to the Arrangement, the Government of the United States of America recognizes that the ultimate destination of such products may not be known to the Government of Japan at the time of their exportation.

2. In the event unexpectedly large and sudden fluctuations in the forecasts of apparent domestic consumption lead to difficulty in shipping within the export ceiling, the Government of the United States of America will consult upon request' and will give due consideration to whether additional flexibility concerning percentages or timing of use is required.

3.
(a) The provision in paragraph 6 of the Arrangement contains a limitation of 48 percent for each period that is intended to avoid the concentration of shipments during any period of time. In addition, the provisions in the Arrangement that provide for flexibility, particularly those contained in paragraphs 6, 7, and 12 contain limitations that are intended to avoid the concentration of shipments during any period of time or in any particular category or sub-category.

(b) The Government of the United States of America recognizes that these provisions could have adverse effects and agrees to take appropriate actions to accommodate normal commercial considerations, including shipping schedules; to facilitate the full utilization of the export ceilings in the Arrangement; and to accommodate special situations that could occur in the Japanese export performance in specific categories or sub-categories.

4. With respect to paragraph 9 of the Arrangement, the Government of Japan will supply such data on computer tape on a monthly basis. In addition, paragraph 9 of the Arrangement and this paragraph will apply to each possible new sub-category candidate.

5. The Government of Japan and the Government of the United States of America agree, with respect to the creation of a new sub-category referred to in paragraph 12 of the Arrangement, as follows:

(a) A new sub-category will be created either at the beginning of the period or at the beginning of July in each period following the consultation to be held on request in April and October each year.

(b) No new sub-category shall be created other than from those listed in the Appendix F of the Arrangement and described and classified in Annexes A and B.

(c) A new sub-category may be created out of the products listed in the Appendix F of the Arrangement and described and classified in Annexes A and B when the following conditions are fulfilled:

(1) The Japanese share in the United States apparent consumption of the product in the 12 months ending 2 months before the month in which the consultation is held has increased by more than 10 percent over the benchmark share of United States apparent consumption in Appendix F of the Arrangement.

(2) The import of the product from Japan has increased in quantity by more than that from any other significant exporting countries which entered into an arrangement or under standing with the Government of the United States of America under the Steel Trade Liberalization Program of July 25, 1989, and provided that export restraint measures or measures with the same effect have been taken on the same product with respect to such other countries.

Note: The increase of imports from Japan to accommodate short supply, or that caused by differences between the forecasted apparent consumption and the preceding forecasted apparent consumptions or the actual figures or use of provisions concerning advance use, carryover should be duly considered in the above calculations.

6. If imports from Japan of a product show a significant increase indicating the possibility of diversion of trade into stainless steel sheet over 1, 370 mm wide, consultations will be held promptly upon request between the Government of Japan and the Government of the United States of America with the objective of working out a mutually satisfactory solution and reaching agreement on preventing such diversion.

7. With respect to wire rope and strand described and classified in Annexes A and B, the Government of Japan and the Government of the United States of America agree as follows;

(a) The coverage of wire rope and strand under the Arrangement and as provided herein will not be conditional upon the withdrawal of antidumping cases.

(b) These products will also be subject to export licensing upon revocation of existing antidumping orders with an export ceiling to be mutually agreed upon in consultations.

(c) For such time as antidumping orders remain in effect, the Government of Japan agrees to monitor exports; provide monthly export data on a quarterly basis; consult promptly if exports of either wire rope or strand reach the 1983 level; furthermore if the 1982-1983 average level for wire rope or the 1982-1984 average level for wire strand is reached, institute export licensing at either or both of those levels unless the Government of the United States of America determines after consultation that market conditions make such licensing unnecessary.

(d) If export licensing is instituted under sub-paragraph ( c) above, the Government of the united States of America will take appropriate action with respect to revocation of existing orders.

(e) The provisions of the Arrangement other than paragraphs 1, 3, 4, 10, 11, 13, and 14 shall otherwise be suspended until such time as export licensing is instituted pursuant to this paragraph.

8. The view of the Government of the United States of America concerning the applicability of the antitrust laws of the United States with respect to the Arrangement are those set forth by the Department of Justice which are attached herewith as Annex C.

9. Both Governments agree that, if, during the period in which the Arrangement is in effect, it is determined that any burden over and beyond those stated in sub-paragraphs (a) and (b) of paragraph 2 of the Arrangement is imposed by the United States of America upon any of the Arrangement products by any legislative or administrative action of the United States of America which is duplicative of the Arrangement, the Government of Japan shall be entitled to terminate the Arrangement with respect to some or all of the Arrangement products that are the subject of the action, after consultations with the Government of the United States of America, at the earliest 15 days after such consultations. If the significant trade interests of Japan are affected, termination may cover some or all of the Arrangement products in accordance with sub-paragraph (b) of paragraph 2 of the Arrangement.

　This provision will not include any investigation covered by sub-paragraph (a) of paragraph 2 of the Arrangement or tariffs and non-tariff measures addressed in Article 5 of the Framework on Steel Trade Liberalization between the Government of Japan and the Government of the United States of America, dated February 14, 1990.

10. Notwithstanding paragraph 8 and Appendix of the Arrangement, the Government of the United States of America will not refuse to consider a request for short supply from the Government of Japan that does not contain all the information in Appendix E of the Arrangement if all such information is not reasonably available to the Government of Japan.

　Washington, D. C., February 14, 1990

　For the Government of Japan:
Ryohei Murata

　For the Government of the
United States of America:
Juliis L. Katz

ANNEX C
　The Honorable S. Linn Williams Deputy united states Trade Representative Washington, D. C. 20506

　Dear Ambassador Williams:

　This letter responds to your request for the views of the Department of Justice on antitrust questions regarding the voluntary export restraint agreement (VRA) that has been negotiated between the Governments of the United States and Japan pursuant to the President's Steel Trade Liberalization Program. This VRA is to supercede the similar agreement that has been in effect between the two governments since 1985.

　As you noted in your letter, the Department of Just ice reviewed the 1985 agreement. We concluded that its implementation by the Government of Japan would not give rise to violations of United States antitrust laws, and that an American court, properly applying and interpreting our laws, would likely so hold. A copy of the May 1985 correspondence between your office and ours, describing the 1985 arrangement and reflecting our advice, is attached for reference.

　To the extent that the just-concluded agreement continues to be authorized and implemented in the manner described in our 1985 exchange of letters, our opinion regarding the application to it of U. S. antitrust laws would remain the same as we stated therein. In your letter to me, you have advised us that the implementation of restraints on exports of certain specialty steel products will differ in certain respects from the procedures described in 1985. We have considered these differences and hat concluded that they would not lead us to alter our opinion.

　Sincerely yours,

　Michael Boudin
Deputy Assistant Attorney General
Antitrust Division

Attachments

　The Honorable Robert E. Lighthizer. Deputy United States Trade Representative Washington D. C.

　Dear Ambassador Lighthizer:

　This letter responds to your request for the Views of the Department of Justice on antitrust questions regarding measures being contemplated by the Government of Japan to restrain the export of certain steel products to the United States. These export restraints are to be implemented under the Arrangement Concerning Trade in Certain Steel Products Between Japan and the United States, negotiated between the U. S. and Japanese governments following the enactment of the Trade and Tariff Act of 1984 and in accordance with the National Policy for the Steel Industry.
You have advised us that the Japanese Government contemplates implementing and enforcing the export restraints called for by the Arrangement in the following way:

(1) For each steel product category and sub-category covered by the Arrangement, the Ministry of International Trade and Industry (MITI) will determine the tonnage available to each Japanese steel producer for export to the United States. MITI will issue written directives to each producer setting forth that producer's allowable tonnage for export to the U. S.

(2) MITI will direct Japanese steel producers to form an export arrangement, and will direct steel exporters to form an export association, in accordance with Japan's Export and Import Trade Law, for the purpose of limiting the quantity of steel exported to the U. S. to the volumes called for by the Arrangement and by MITI's allocation of those Volumes among producers.

(3) Upon the formation of the export arrangement and export association, MITI will subject the export of all steel products covered by the Arrangement to export licensing requirements pursuant to Article 28 (2) of the Export and import Trade Law. Export licenses will be refused for any exports to the United States in excess of the quantities allowed to each producer by MITI. Any entity which export s any covered steel product to the U. S. without a license will be punished by criminal sanctions under Article 42. and be subject to a one year embargo of future exports under Article 28 (4), of the Export and import Trade Law. The exporters, association will be directed by MITI to administer these export licensing measures.

(4) MITI will require the producers and exporters, individually and/ or through the producers arrangement and exporters' association, to submit to MITI such reports as are required to assure MITI that its directives are being followed - Failure to submit the required reports will be punishable, and punished, under Japanese law.

(5) Except as described above, the producers and exporters will not be authorized by MITI to enter into any other agreements regarding quantities, prices, customers, or terms of sale of steel products to the United States.

(6) To further assure compliance with its directives, as described above, MITI has stated and will advise the producers and exporters in writing that in the event of noncompliance MITI will promptly make the export of Arrangement-covered steel products to the U. S. subject to export licensing under Article 48 of the Foreign Exchange and Foreign Trade Control Law and Article 1 of the Export Trade Control Order, and will enforce through that mechanism the export maximums it has established. Any entity that exports steel to the United States without an export license issued by MITI under these provisions will be punished by criminal sanctions under Article 7O, and be subject to a one year embargo sanction under Article 53, of that law. As we understand the explanation provided by the Japanese Government, export licensing measures under the Export and Import Trade Law (as described in paragraph 3 above) can only be implemented upon the formation of export arrangements or associations pursuant to that law (as described in paragraph 2 above). while MITI fully expects the producers and exporters to comply with its directives to form such an arrangement and association, MITI's statement that it is prepared in any event to impose equivalent restraints under alternative provisions of Japanese law makes clear to the companies that they have no practical choice but to comply.

(7) Lastly, the Japanese Government has represented that MITI has the responsibility and authority under Japanese law to carry out the described measures.

　In these circumstances, we believe that the Japanese firms' compliance with MITI's directives would properly be viewed as having been compelled by the Japanese Government, acting within its sovereign powers. The implementation of such an export restraint by the Government of Japan including the division among producers by MITI of the maximum volume of each product that may be exported to the United States, would not in our view give rise to violations of United States antitrust laws. We believe that all American court, properly applying and interpreting our antitrust laws, would likely so hold.

　Sincerely,

　Charles F. Rule
Acting Assistant Attorney General
Antitrust Division

FRAMEWORK ON STEEL TRADE LIBERALIZATION

　Preamble

　The Government of Japan and the Government of the United States of America,

　recognizing that the global steel sector, given production scale requirements, has been characterized by a history of subsidies, extensive trade distortive practices and overcapacity,

　recognizing also the importance of multilateral efforts, aimed at the elimination and prevention of such trade distortive practices,

　recalling the objectives of the Arrangement between the Government of Japan and the Government of the United States of America concerning Trade in Certain Steel Products dated February 14, 1990 (hereinafter referred to as "the Voluntary Restraint Arrangement") which is to create a period of trade stability in order to facilitate the modernization of the United States steel industry,

　confirming the importance of joint efforts undertaken by the Government of Japan and the Government of the United States of America aimed at the elimination and prevention of such trade distortive practices, which will be conducive to a further effective realization of the objectives of the Voluntary Restraint Arrangement,

　have reached the following under standing.

Article 1. Basic Objectives and General Provisions

　1. The basic objectives of this Framework are:

o To Provide a transition toward more liberal conditions for steel trade and toward a multilateral agreement to eliminate and prevent trade distortive practices in the steel sector; and

o To establish a multilateral trading environment for steel that is free from trade distortive practices.

2. The Government of Japan and the Government of the United States of America agree that multilateral international rules participated in by the major steel trading countries (hereinafter referred to as "the International Rules"), which provide for both fair and open trade in steel, should be pursued through the Uruguay Round of Multilateral Trade Negotiations (hereinafter referred to as "the Uruguay Round"). Both Governments also confirm, with regard to steel, their intention to build from the disciplines contained in this Framework.

　The Government of Japan and the Government of the United States of America confirm that their mutual interests will be served by working together in the Uruguay Round to achieve multilateral agreement on the Inter national Rules imposing effective disciplines on subsidies and limitations on tariff and non-tariff measures, that are consistent with the aims and principles of this Framework. To obtain this objective, the Government of Japan and the Government of the United States of America agree that they will both seek such agreement in the Uruguay Round and cooperate to achieve this end.

3. This Framework will not prejudice the positions of the Government of Japan and the Government of the United States of America with respect to general disciplines, including those on subject matters covered by this Framework, being negotiated in the Uruguay Round.

4. For purposes of this Framework, "steel" means those products described in paragraph 3 of the Voluntary Restraint Arrangement.

Article 2. Subsidies

1. The Government of Japan and the Government of the United States of America reaffirm, for purposes of this Framework' their obligations not to grant any export subsidy identified in the Illustrative List of Export Subsidies in the Annex to the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade.

　The Government of Japan and the Government of the United States of America confirm their commitment to their respective policies not to take steps to provide the other subsidies listed as prohibited subsidies in the Appendix

2. The Government of Japan and the Government of the United States of America share the view that a set of new disciplines in the field of subsidies on steel products should be provided for in the International Rules and agree to work to that end. In this context, both Governments confirm that these disciplines should include the prohibition of the subsidies listed in the Appendix.

Article 3. Market Access

1. Tariffs:

　Recognizing that the trade weighted average rate of duty is 5 percent or less in the steel sector in each country, the Government of Japan and the Government of the United States of America reaffirm their obligations to maintain duties at the current low levels provided for in their respective schedule of concessions annexed to the Protocol to the General Agreement on Tariffs and Trade (hereinafter referred to as "the GATT"). Moreover, both Governments agree to work toward the further, permanent reduction and eventual elimination of tariffs on steel in the Uruguay Round.

2. Non-tariff Measures:

(a) It is agreed to terminate all voluntary restraint arrangements on steel by March 31, 1992.

(b) With the exception of the measures specified in 2 (a), recognizing that quantitative restrictions or licensing requirements inconsistent with the GATT rules are not imposed in either country, the Government of Japan and the Government of the United States of America confirm their commitment to their respective policies not to take steps to impose such restrict ions or measures. Both Governments reaffirm their obligations not to impose other non-tariff measures with respect to steel that are inconsistent with the GATT rules.

Article 4. Export Financing

　Recognizing that the Government of Japan and the Government of the United States of America continue to make structural adjustments in the steel sector, they confirm in this connection their respective policies not to foster overcapacities in steel production.

　In this regard, the Government of Japan and the Government of the United States of America confirm their positions to seek improved discipline over tied aid credits and other forms of subsidized official export credit support for stool plants and equipment in the Organization for Economic Cooper at ion and Development (hereinafter refer red to as "the OECD"), and to continue to exchange information on the basis of the OECD guideline.

Article 5. Consultation and Dispute Settlement

1. The Government of Japan and the Government of the United States of America shall enter into consultations with each other concerning such representations as either Government may make with respect to any matter covered by this Framework.

2. if any dispute arises between the Government of Japan and the Government of the United States of America arising out of, or related to, any matter covered by this Framework, including whether either Government has taken actions that are inconsistent with this Framework, and if such dispute cannot be settled by means of consultations within fifteen days after a request therefore made by either Government, then the Government of Japan or the Government of the United States of America may notify the other Government that it is referring the dispute to a dispute settlement panel and appoint a panel member. Within fifteen days of such notice, the other Government must appoint a second panel member. Such panel members shall not have a financial interest in the dispute and shall not take instructions from either Government.

　The two panel members appointed by the Government of Japan and the Government of the United States of America shall appoint a third panel member, selected from a list compiled by the Government of Japan and the Government of the United States of America, or by random selection if necessary, within fifteen days after the appointment of the second panel member. The third panel member shall not take instructions from either Government, shall not have a financial interest in the dispute, and shall serve as Chairman of the panel.

　The rules of procedure shall be established promptly by the Government of Japan and the Government of the United States of America. The procedures shall assure a right to at least one hearing before the panel as well as the opportunity to provide written submissions and rebuttal arguments. The panel shall have the authority only to find the facts for purposes of actions by the Government of Japan and/or the Government of the United States of America. Such findings shall, if appropriate, include whether actions of either Government are inconsistent with this Framework, and, if so, what measure is required in accordance with paragraph 5 of this Article. For purposes of this Article, "actions" includes any measures taken, by either Government, whatever the form and even if taken after the entry into force of this Framework.

3. The panel shall adopt its findings by majority vote within three months after the Chairman is appointed.

4. For purposes of paragraphs 2 and 3 above, if either the Government of Japan or the Government of the United States of America finds that any export subsidy, any grant or tax benefit specifically provided to the steel industry; or any other subsidies listed as prohibited subsidies in the Appendix which exceeds $2.5 million (hereinafter referred to as "actions clearly and significantly inconsistent with this Framework") is provided to a company in the other country, the adversely affected Government may propose a preliminary measure required in accordance with paragraph 5.

　The procedures for establishing a preliminary measure shall be as follows:

(a) If the matter has not been resolved through consultations within 15 days, and notice has been given by the adversely affected Government that it will propose a preliminary measure against actions it considers clearly and significantly inconsistent with this Framework, the Government of Japan and the Government of the United States of America shall within 5 days appoint the Chairman of the dispute settlement panel by agreement or by random selection from the mutually compiled list.

(b) After selection of the Chairman, the adversely affected Government may submit to the Chairman a proposed preliminary measure. Within 15 days, the Chairman must find whether the preliminary measure proposed is authorized or needs modification. The decision of the Chairman on the existence, scope, nature and duration of the preliminary measure shall be made based upon his finding of the existence of the actions clearly and significantly inconsistent with this Framework, and in accordance with the provisions in paragraph 5 below.

(c) The preliminary measure found by the Chairman to be authorized may be applied until extended, modified or terminated as a result of the panel's final findings.

5. In making its findings on measures under paragraphs 3 and 4, the panel shall subject itself to the following provisions:

　
(a) Such measures shall be related to the product, sub-category or category most closely associated with the action in question, and shall be limited to an increase or decrease in the export ceilings established under the Voluntary Restraint Arrangement. The amount of increase or decrease in the export ceilings shall be limited to 50 percent of Japan's average annualized total export ceiling.

(b) In designing such measures, the panel shall take into consideration the following:

(1) the gravity and nature of the action in question; and

(2) the duration thereof.

6. The Government of Japan and the Government of the United States of America will consult within 5 days after notice that the panel's finding is complete. Within 15 days after the start of consultations, the Government of Japan or the Government of the United States of America shall implement the panel findings.

Article 6. Review of Framework

　In view of the policy of the United States of America to seek the acceptance of bilateral and multi lateral disciplines comparable to those contained in this Framework, and also confirming the policy of the United States of America to provide fair and equitable treatment for Japan vis-a-vis other countries that have comparable arrangements with the Government of the United States of America, the Government of Japan and the Government of the United States of America agree to consult promptly with a view toward arriving at a mutually acceptable solution if the Government of Japan considers that this Framework provides terms less favorable than those contained in comparable arrangements between a third party and the Government of the United States of America.

Article 7. Relations with the GATT

　The Government of Japan and the Government of the United States of America recognize that their rights and obligations under the GATT are not affected by this Framework.

Article 8. Implementation

　The provisions of this Framework will be implemented by the Government of Japan and the Government of the United States of America within the scope of the laws and regulations in force in their respective countries.

Article 9. Duration of Framework

1. This Framework shall remain in force until March 31, 1992, or such earlier time as the Voluntary Restraint Arrangement terminates in its entirety.

2. Upon conclusion of negotiations on the International Rules, and before March 31, 1992, a consultation will be held between the Government of Japan and the Government of the United States of America in order to discuss the matter of continuation or modification of this Framework.

　Washington, D. C., February 14, l990

　For the Government
of Japan:
Rvohei Murata

　For the Government
of the United State
of America:
Julius L. Katz

APPENDIX
　Prohibited Subsidies

　Export Subsidies:

　-- Any export subsidy provided to the steel industry as identified in the Illustrative List of Export Subsidies which is annexed to the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade.

　Domestic Subsidies: 1/

　-- Any domestic subsidy specifically provided in any manner, whether directly or indirectly, to the steel industry 2/.

　Notwithstanding the above, the following shall not be considered prohibited subsidies for purposes of this Appendix:

　
　- Research and development subsidies provided to projects where the results of the research and development are made available to the public.

　- Subsidies for Closure: 3/

　(Note 1) For purposes of this Appendix, "domestic subsidies" shall mean such subsidies as:

　-- grants such as cash outlays and debt forgiveness;

　-- equity infusion, loans, and loan guarantees which cannot be regarded as a normal provision of risk capital according to normal investment practice in the country in question;

　-- tax benefits such as credits, deductions, preferences and exemptions and

　-- preferential provision of goods and services.

　(Note 2) The following are among the domestic subsidies that would not be considered "specifically provided to the steel industry":

　(a) Domestic subsidies that are generally available, with the conditions for eligibility being based on neutral and objective factors, or

　(b) Subsidies whose economic effects are mostly in areas outside the steel industry.

　(Note 3) Considering the special Characteristics of the steel industry and its needs this provision authorizes only support to entirely cease steel production by a steel producing entity, and only in an amount that is limited to only a part of the costs of closure, less any benefits from closure, and provided that such closure is permanent and prompt, and further provided that such aid does not benefit any subsequent production of steel by any entity.