Despite Prime Minister Shinzo Abe’s pledge to protect national interests, Japan appears set to lose far more than it will gain--at least initially--from joining the Trans-Pacific Partnership free trade deal.
Japan will make substantial concessions on automobiles to the United States, while it is unclear whether it can keep tariffs on key farm produce, according to a Japan-U.S agreement announced on April 12.
The United States will maintain a 2.5 percent tariff on cars and a 25 percent tariff on trucks for imports from Japan for the maximum period allowed under the TPP.
The agreement did not specify when the tariffs will be scrapped. Japanese officials hope that they will be removed in about 10 years, but it could take far longer.
“We have been taken advantage of and forced to pay a steep admission fee,” lamented a senior official of the Ministry of Economy, Trade and Industry.
For Japan, the primary advantage of joining the free trade agreement is the prospect of tariff-free vehicle exports to 11 other prospective TPP members, particularly the United States.
Japanese companies annually pay 470 billion yen ($4.8 billion) in export duties to the 11 countries. Automobiles account for half the amount.
Akira Amari, minister in charge of the TPP, said the United States, which has led the TPP negotiations, made a number of key demands of Japan because it is only now ready to join the TPP process.
Amari said Japan and the United States will continue to discuss when U.S. tariffs on automobiles will be lifted.
With U.S. approval effectively guaranteed, Japan is expected to take part in TPP negotiations as early as late July.
“Joining the TPP is based on a farsighted policy,” Abe told a select group of Cabinet ministers on April 12. “We have to fight to protect our national interests from now.”
But it remains unclear whether Japan can continue to protect its domestic agricultural market with high tariffs.
The agreement announced by the Japanese government said there are a number of sensitive items in trade between Japan and the United States. It cited “certain agricultural products” for Japan and “certain manufactured products” for the United States.
As such, it simply endorsed a joint statement the two countries released after a summit between Abe and U.S. President Barack Obama in Washington in February.
But the agreement announced by the U.S. government on April 12 does not make any mention of possible favorable consideration to Japanese farm produce by Washington.
The ruling Liberal Democratic Party has called for five sectors--rice; barley and wheat; dairy products; beef and pork; and sweetening resource crops such as sugar and starch--to be excluded from tariff elimination.
A source close to the negotiations said, “A most decisive battle will begin from now on.”