Japan and the United States are negotiating a bilateral scheme to counter vehicle trade pact violations with tariff hikes under the planned Trans-Pacific Partnership free trade agreement, according to sources.
Under the "snapback" scheme, the United States would restore tariffs on vehicle imports from Japan if domestic U.S. vehicle sales decline sharply due to a TPP violation by Japan after the tariffs are repealed.
Because Japan has no tariffs to repeal on vehicle imports, however, the scheme may be designed to allow Japan to counter a U.S. vehicle trade pact violation with a restoration of tariffs for other products such as farm goods or with a demand for damages.
The two countries are also negotiating the U.S. removal of tariffs on more than 300 automotive parts imported from Japan, the sources said Thursday.
The U.S. has agreed to immediately repeal tariffs on a large number of automotive parts but remains reluctant to accept the tariff removal for transmissions and other parts produced by U.S. companies.
Even if the U.S. agrees to immediately remove tariffs on half the total number, the agreement would not be satisfactory for Japan if it fails to cover key products, a TPP negotiation source said.
These and other TPP negotiations are reaching the final stage as the 12 participating countries plan to hold a ministerial meeting next week to strike a broad agreement.
The United States, Australia, Brunei, Chile, New Zealand, Peru, Singapore and Vietnam launched the TPP talks in 2010, joined later by Malaysia, Mexico, Canada and Japan.