World

Japan, US agree on free trade auto exception

PTI Tokyo | Updated on March 12, 2018

Tokyo and Washington have agreed on exemptions for the auto industry in a mooted Pacific-wide free trade pact, as Japan readies to announce its entry into negotiations, reports said today.

The two Pacific powers agreed in principle that the US will be able to keep tariffs on car imports — 2.5 per cent for passenger cars and 25 per cent on trucks — for at least five to 10 years under the Trans-Pacific Partnership (TPP), the Mainichi Shimbun and other media reported.

US President Barack Obama has cast the TPP as a vital plank in his so-called “pivot” to Asia, saying the emerging pact could boost growth and set rules to govern trade in the dynamic but unwieldy region, which includes much of East Asia, as well as some American countries.

The participation of both Japan and the US, the world’s two largest developed economies, would mean the pact covers nearly 40 per cent of the world’s economy.

But the US auto sector is opposed to Japan’s entry, claiming Tokyo maintains non-tariff barriers on autos, and says a deal would give Japanese automakers unfettered access to their market, without allowing them the same chances.

Japan’s agriculture lobby is also firmly opposed, fearing unprecedented foreign competition would devastate Japan’s small-scale farming sector and rural communities.

Tokyo and Washington agreed in preparatory talks that there would be at least a five- to 10-year delay in the removal of import tariffs on autos — the moratorium agreed in a recently-enacted US-South Korea free trade agreement — reports said.

Japanese Prime Minister Shinzo Abe is expected to announce Japan’s entry into negotiations on the TPP as soon as March 13, several media have said.

At the end of a summit in Washington last month, Japan and the US issued a joint statement on the TPP recognising “bilateral trade sensitivities, such as certain agricultural products for Japan and certain manufactured products for the US”.

The US has been keen not to be seen giving ground ahead of any formal talks, while Abe, who faces crucial Upper House elections in July, needs to be able to show he has extracted concessions if he is to convince — or obviate — the powerful farming lobby.

The Washington statement was praised for treading a fine line, allowing both sides room to be able to spin it as a low-key victory.

“As the final outcome will be determined during the negotiations, it is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining the TPP negotiations,” said the statement.

Published on March 06, 2013

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