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Auto tariff key issue in Japan-U.S. TPP talks

  • 2015-07-08 15:00:00
  • , Tokyo Shimbun
  • Translation

(Tokyo Shimbun: July 8, 2015 – p. 7)

 

 By Michio Yoshida

 

 The Japanese and U.S. governments will resume bilateral working level talks on the Trans-Pacific Partnership (TPP) in Tokyo on July 9-10. Negotiations so far have been deadlocked on the U.S. tariff on Japanese car imports. Differences over U.S. tariff on Japanese auto parts and tariff-free or low-tariff rice imports from the U.S. have also not been resolved. The crucial issue is whether the two countries will be able to find a solution.

 

 The U.S. has been reluctant to abolish the tariff (2.5%) on Japanese cars and auto parts, claiming “U.S. products will be impacted and this will increase unemployment.”

 

 When Japan entered the TPP talks belatedly in 2013, it had agreed to the unfavorable condition of accepting the longest delay in tariff abolition for Japanese cars in the prior consultations with the U.S., for the sake of obtaining the U.S.’s consent to join the TPP talks.

 

 For this reason, “if the U.S. comes to agree with a TPP nation other than Japan to abolish tariffs for a certain product over 50 years, the U.S. will also be able to retain the tariff on Japanese cars for up to 50 years,” according to a source close to the negotiations. While Japan is seeking tariff abolition as soon as possible, it is believed that the U.S. is refusing based on this agreement during the prior consultations in 2013. With regard to auto parts, the U.S. is insisting on retaining the tariff on engines and other major exports “for 10 years or so,” resulting in disagreement between the two sides.

 

 The two countries are also in conflict over the definition of “made in Japan.” According to a person connected with the bilateral talks, the U.S. is requiring the procurement of at least 70% of parts from TPP nations for cars to be recognized as “made in Japan.” The official reason given for this is that it will prevent China, the ROK, and other non-TPP members from benefiting, but in reality, it is an attempt not to recognize products as “made in Japan” as much as possible.

 

 Issues that are not resolved at the working level will be carried over to the ministerial level meeting between TPP Minister Akira Amari and USTR Michael Froman, who are expected to meet on and off on the sidelines of the 12-nation TPP ministerial meeting to be held in late July. (Slightly abridged)

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