US watching Japan Post privatization - USTR

WASHINGTON, Feb 15 (Reuters) The United States could take legal action against Japan at the World Trade Organization if the privatization of the country's huge public postal and financial services provider is not done in a fair manner, US Trade Representative Susan Schwab said.

''We are monitoring this very closely'' to ensure there is a level playing field for US banks and insurance firms in Japan after Japan Post is privatized, Schwab yesterday said during a hearing in the House of Representatives on the Bush administration's trade agenda. ''We will, if necessary, seek litigation.'' Japan Post, the country's largest employer, has large banking and insurance businesses in addition to its mail and parcel delivery operations. Lawmakers told Schwab they were worried the planned privatization was being done in a way that disadvantages US insurance companies.

Schwab said she had raised the issue at least twice with top Japanese trade officials and will continue to closely monitor the situation as privatization proceeds.

''Privatization is fine, unless they are creating an unfair advantage'' for Japanese firms, Schwab said.

The United States prefers not to take legal action to resolve trade disputes, but will if necessary, she said.

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