US in new trade clash with Japan

Japan's troubled trade relations with the United States were complicated further yesterday when the American government announced a new set of punitive sanctions, on top of those already threatened against Japanese cars.

The new measures, worth as much as 10bn a year (pounds 74m), will effect cargo flights by Japanese airlines, and emerged just as the two countries' long- running auto dispute appeared to be edging towards a face-saving compromise.

America and Japan have been at loggerheads for years over the question of `Beyond Rights' - the rights of an airline to operate flights from foreign airports into those of a third country.

Japan's position between the Pacific Ocean and the Far East makes it a crucial launch pad for American airlines into the booming economies of East Asia and recently the US cargo carrier Federal Express requested permission to operate between Japan and the Philippines.

At present US airlines operate 156 flights a week from Japan to Asian destinations, carrying commercial cargo and 1.4 million passengers a year. Japan, on the other hand, operates two flights a week from American airports, generating just 3,000 passengers annually.

After Japan rejected the airline's request, the US Department of Transportation announced restrictions on the goods that could be carried from Japan to the United States by Japan Air Lines and All Nippon Cargo Airlines.

Japan's Ministry of Transport said that it was "astonished" by the decision and would consider retaliatory action.