Japan, US eye penalty system in TPP

Tokyo

JAPAN and the United States have entered the final stages of opinion coordination regarding the Trans-Pacific Partnership (TPP) free trade agreement, aiming to introduce a system of invoking penalties if either country fails to implement accords in automobile trade that are to be decided in bilateral talks, according to sources.

If a violation occurs, Japan and the US will be able to raise tariffs on certain categories to levels used before TPP talks. The US is aiming to do so for cars and Japan is eyeing farm products. The penalty system is under discussion as part of efforts to raise the effectiveness of the TPP agreement.

Penalties can mainly be invoked in two cases: If the US does not abolish tariffs on cars and auto parts imported from Japan by the end of a predetermined period, and if Japan does not meet safety and environmental standards on car models chosen by the US side, after the two sides agree on the details of these measures.

On Jan 28, the Japanese and US sides resumed working-level talks in Washington. It was agreed that the US will abolish tariffs on cars and auto parts imported from Japan. Tariffs are currently 2.5 per cent on Japanese cars and most auto parts.

Talks are now focused on the amount of time needed until the US completes the abolition of the tariffs.

Japan-US negotiations hold the key to all of the processes regarding TPP talks. The US has demanded that a violation, for example in the automobile field, means the penalty system can only be introduced in that same field.

But Japan has already abolished import tariffs on American cars, so the nation is arguing that it should be allowed to raise tariffs on farm products to previous levels.

Given negotiations are approaching a decisive stage, the US side changed its stance and accepted the demand. The two countries are set to speed up talks involving practical points of the penalty system, including the specific farm products that would have their tariffs raised as well as the length of time the penalties would be enforced. WP