Australia has demanded it be allowed to keep its 5 percent tariff on Japanese car imports in place in bilateral free-trade negotiations with Japan.
The demand is apparently a response to Tokyo’s recent decision to tolerate U.S. auto tariffs in separate trade negotiations, a Japanese government source said.
Australia had been willing to abolish the tariff on automobiles and trucks within three years of enacting any bilateral pact, but changed its stance to lengthen the period.
During the period, which will probably be around 10 years, Australia is expected to lower the tariff gradually to give its domestic auto factories time to adjust.
The move follows reports last month that Japan decided to let the United States keep its auto tariffs in place for an undisclosed period in preparatory talks for joining the Trans-Pacific Partnership negotiations, the source said.
Japan made the concession with the U.S. in exchange for keeping its own protective tariffs in place on rice and other farm products in the TPP.
But that has raised concerns that Canada and Vietnam, which are already in the TPP talks and also protect their auto industries with high tariffs, will make similar demands if Japan accepts Australia’s request.
This could subsequently undermine Japan’s goal of expanding exports by joining the TPP.
Regardless of whether Japan will accept the demand for the bilateral talks, Australia, another member of the TPP negotiations, is expected to approve Japan’s entry into the multilateral negotiations, which involve 11 nations.
Japan has been engaged in bilateral trade talks with Australia since 2007. Japan’s main goals are to secure stable energy supplies and eliminate Australia’s auto tariffs.
Australia is the third-largest auto market for Japan after the United States and the European Union.
Its exports to Australia were roughly 400,000 vehicles in 2012, according to the Japan Automobile Manufacturers Association.
About half of Japan’s exports to the country comprise transport equipment and related parts.