US may drop tariffs on Japanese cars in 10-plus years

02/02/2015 12:00 - 486 Views

TOKYO -- Japan and the U.S. are negotiating a deal that will eliminate tariffs on Japanese automobiles after a grace period of more than 10 years, moving closer to an agreement on a major sticking point in the Trans-Pacific Partnership trade talks.

For Japan, finished autos, including passenger cars and trucks, account for almost 30% of total exports to the U.S. in value terms. In TPP talks so far, the two sides have already agreed that the grace period for the elimination of U.S. auto tariffs will match the longest duration that Japan will take to reduce or end levies on American farm products.

The two sides are now ironing out an agreement on Japan lowering or dropping tariffs on beef and pork over more than 10 years. So the U.S. will likely secure the same length to abandon automobile tariffs.

While Japan is set to gradually reduce its beef tariff from 38.5% to around 10%, the U.S. will likely eliminate its 2.5% auto tariff in one fell swoop. A safeguard provision will be added to allow the U.S. to revive the tariff if Japan is found to be responsible for a trade dispute.

Japan is considering eventually changing its tariff on cheap pork to a weight-based levy, at around 50 yen (42 cents) per kilogram. It hopes to put safeguard measures into place that will temporarily raise the duties to around 100 yen per kilogram if Japan becomes flooded with cheap U.S. imports.

Tokyo and Washington are scrambling to reach a comprehensive agreement on autos and agricultural products by next month. The 12 nations participating in the TPP talks hope to come to a basic agreement at a high-level meeting to be held as early as March.

Source: Nikkei