Tokyo: Japan's trade minister threatened retaliation against US steel tariffs if demands for compensation were not met after a tough-talking meeting on April 11 with US Trade Representative Robert Zoellick.

Trade minister Takeo Hiranuma demanded compensation such as lower US tariffs on Japanese video cameras, watches and other goods in exchange for what Tokyo sees as damaging penalties on its steel exports to the United States.

"If we don't receive a positive response, we will have to prepare to take countermeasures," Hiranuma told Zoellick, according to a ministry briefing. The moves would include increasing tariffs on Japanese imports of US goods.

The two sides agreed to talk again over the phone as early as next week.

On March 5, US President George W. Bush announced a plan to impose tariffs of between eight and 30 per cent on steel imports except those from countries such as Canada and Mexico, which have free trade agreements with Washington.

The steel tariffs caused a global uproar when they were implemented on March 20, with six World Trade Organization members - including the European Union and Japan - lodging complaints under the WTO's dispute settlement mechanism.

Zoellick did not offer Hiranuma a definite response at the meeting, but warned against retaliation.

"What we are quite adamant about is it is not the place of any country to make a unilateral WTO interpretation," Zoellick told a news conference held at the US Embassy after the talks.

"It is not the place of any country to avoid a neutral panel to resolve a disagreement and then come up with their own retaliation," he said.

"I caution that if countries go in that direction, it is a dangerous prospect for the WTO."

Japan's trade ministry said the US measures will cause potential losses of 167 million Dollars with the tariffs affecting roughly 1.4 million tonnes, or 659 million Dollars, of local steelmakers' US-bound exports based on calendar 2001 trade figures.

But Zoellick slammed Japan's steel trade practices, and defended the US safeguards, which he called a temporary measure to let the US steel industry restructure itself amid the global glut in supply.

"In Japan's case, it's record on steel has been deeply disappointing," he said. "If you look at the basic strategy of Japanese steel, it's been to shelter the domestic market through anti-competitive practices and then to try to sell low-cost steel in external markets," Zoellick said. "Part of my message is that's not going to be a successful 21st century strategy."

Hiranuma also took a shot at US steel makers before his meeting. "The problem with the US steel industry is its lack of competitiveness, so just blaming an increase in imports will not solve the problem," he said.

Zoellick said the measures affect 53 per cent of all Japanese steel exports, with tariffs not affecting 600 million Dollars worth of Japanese steel sold in the US.

He added special exclusions granted to certain types of Japanese steel were higher than for other countries.

"The 21 exclusions granted to Japanese companies, frankly, are larger than for any other country that's been granted exclusions," he said.

Japan, the European Union and the four other steel exporting countries who filed WTO complaints are to jointly hold their first talks with the US in Geneva later on April 11, the Japanese trade ministry said.