Japan to agree to U.S. retaining auto tariffs

Deal reached ahead of Tokyo joining TPP talks

Kyodo

Japan plans to agree to let the United States maintain its automobile tariffs for a certain period during preparatory talks for joining the Trans-Pacific Partnership free-trade negotiations, sources said Tuesday.

As the United States fears a possible surge in Japanese auto exports to the U.S. market under the TPP, Japan is set to agree that the United States will be allowed time to eliminate the tariffs in an attempt to extract a U.S. concession over Japan’s agricultural tariffs once it enters the TPP negotiations, the sources said.

Japan’s participation in the TPP negotiations has been opposed by the U.S. auto industry, as well as by Japanese farming groups fearful of cheaper agricultural imports. Japan currently imposes high tariffs on farm products such as rice and wheat to protect domestic farmers.

Prime Minister Shinzo Abe is planning to formally announce Japan’s participation in the TPP talks before his Liberal Democratic Party’s annual convention on March 17.

Under its free-trade agreement with South Korea, the United States is allowed to retain its tariffs on cars for five years and those on trucks for 10 years. In the ongoing talks with Japan, the U.S. side is seeking longer periods for tariff elimination.

The United States currently imposes tariffs of 25 percent on trucks and 2.5 percent on cars.

A Japanese negotiation source said the specific time frame for such moratoriums “depends on how the TPP negotiations go” in other areas, including the agricultural sector.

Preliminary negotiations between Japan and the United States are under way on automobiles, insurance and other forms of nontariff barriers.

The bilateral talks on the three issues are expected to continue even after Japan joins the TPP negotiations.

Abe addresses TPP fears

Public health insurance and regulations on food safety have not been negotiated in the Trans-Pacific Partnership, Prime Minister Shinzo Abe said Wednesday, attempting to ease concerns that joining the free-trade talks could spoil some domestic systems.

Abe is expected to announced later this month that Tokyo will join in the talks for the U.S.-led trade liberation agreement in the Asia-Pacific region, amid fears among farmers and the medical community that Japan’s participation in the TPP could lead to removal of tariffs and nontariff barriers.

“With the information collected so far, we have recognized that the public health insurance system is not subject to (the TPP) talks,” Abe told a plenary session of the House of Councilors.

“Relaxing individual food safety standards has not been negotiated either,” he added.

Some experts say Japan’s relatively generous universal health care program and food safety standards could be a sticking point when the country joins the TPP talks, in which other participating countries could urge Tokyo to lower or eliminate such barriers for foreign companies to enter the Japanese market more easily.

Abe’s remarks came as the medical sector has expressed concern that joining the TPP, which would enable medical treatment outside domestic health care insurance, could lead to a demise of the long-protected program that has covered all Japanese citizens.

The universal insurance system is “a building block of Japan’s health care system and will never be shaken up,” Abe told the Diet.

Farmers and consumer protection groups have meanwhile urged the government not to make any concessions that would lead Japan to ease its safety standards on food imports, warning against possible relaxation of labeling requirements on pesticide residue and genetically modified foods.

Abe told the Upper House the government will “respond appropriately based on international standards and scientific knowledge.”

Also Wednesday, a panel of the ruling Liberal Democratic Party said it will accelerate discussions on areas that will be highly focused on once Japan joins the TPP talks.

The panel will set up five working groups to discuss strategy for negotiations, financial services, medical and food safety, agriculture, and automobiles and other industrial products.

Japanese farmers have raised calls for the government to win exemption for some agricultural products from the zero-tariff principle under the TPP.