August 28, 2013     http://the-japan-news.com

The Yomiuri Shimbun

BANDAR SERI BEGAWAN, Brunei—Three countries taking part in the current round of Trans-Pacific Partnership negotiations have proposed tariffs be abolished on all imports from their countries to Japan, it has been learned.

Singapore, Peru and Chile, during their respective bilateral discussions with Japan in Brunei, made the proposals, sources involved in the negotiations said Monday. Removing all tariffs is the TPP’s basic principle.

With the proposals, the three countries are believed to aim to seek an extremely high level of trade liberalization from Japan.

Japan, on the other hand, hopes to maintain tariffs in five key categories, including rice, but the latest proposals from the negotiating partners again highlighted the difficulty in the discussions over tariffs.

As of Monday, Japan has so far exchanged proposals regarding tariff abolition and trade liberalization with seven countries.

Although the contents of the proposals made by these negotiators differ from one another, sources say Japan offered to keep its liberalization rate—the percentage of trade goods for which tariffs could be removed—at between 80 percent and 89 percent, according to the sources.

Negotiations over details of tariff rules are conducted in bilateral talks. In such talks, countries first submit to each other a list of items notifying which tariffs should be removed.

Based on the lists, they continue talks and decide on products on which they agree to abolish tariffs.

In principle, tariffs should be abolished on all items, but how far negotiators allow their counterpart to have exceptions is the key to negotiations.

Japan and the three countries have only exchanged draft lists, and where the liberalization rate will eventually be set depends on how the negotiations progress.

Japan already signed economic partnership agreements with the three nations.

Under the EPAs that Japan has concluded so far, the liberalization rate stood between 84.4 percent and 88.4 percent, avoiding tariff abolition in the five key categories.

U.S., Australia to be key

The proposals raised by Singapore, Peru and Chile in their bilateral talks reflect the basic principle of the TPP framework that all tariffs should be abolished.

The focus of attention will now shift to developments in bilateral talks with the United States and Australia, both of which are agricultural giants with strong bargaining power.

During the Brunei TPP negotiations, the Japanese delegation is scheduled to submit a liberalization rate—the ratio that indicates percentages of trade items for which a nation can abolish tariffs—to nine countries in bilateral talks, except the United States and Australia.

The United States needs a certain period of time for research on impacts of trade liberalization with Japan, which newly joined the TPP talks.

The U.S. government thus will not have tariff talks with Japan this time, but will have the talks in mid-September.

Australia will not hold substantial negotiations with Japan on tariffs with Australia’s general election scheduled for September.

Japan has not concluded free trade agreements with the United States and Australia, because increased imports of low-priced pork and beef from the agricultural giants may seriously harm domestic livestock farmers.

In economic partnership agreements which Japan has concluded in the past, the liberalization rate was generally in the 80 percent range.

Sources said the United States and Australia will not be convinced by such a figure.

The key to success of Japan’s participation in the TPP talks depends on what strategy Japan will take in tariff abolishment talks with the two countries.