Japan: Fresh negotiations forestall auto tariff hike – Nomura

Analysts at Nomura note that the US and Japan agreed on 26 September to enter into fresh negotiations over an eventual free trade agreement, and issued a joint statement to that effect.

Key Quotes

“An important aspect of the agreement for Japan is that the two sides have agreed to take no actions that go against the spirit of the joint statement for as long as the negotiations are under way, which means that the imposition by the US of higher tariffs on imported autos is being put off for now.”

“If the US had gone through with placing the added 20% tariff on imported cars, Japan's exports of automobiles to the US would presumably drop off significantly, dealing a blow to Japan's economy. We therefore welcome the news as having forestalled a worst-case scenario for the moment.”

“With regard to opening up Japan's agricultural sector, the agreement incorporates respect for Japan's position by stating that any free trade agreement reached will not go beyond the degree of access negotiated in previous economic partnership agreements.”

“Getting the US to agree to push for no concessions beyond those covered by the TPP should arguably be seen as a politically face-saving success for the Japan side.”