TPP Tariff Phase Out Awaiting US Japan Agreement

The twelve countries involved in the Trans-Pacific Partnership free trade negotiations are considering allowing members to decide tariff phase-out periods on a bilateral basis instead of adopting a unified rule, sources close to the matter said Sunday.

Such an exceptional approach for tariffs, which could enable each country to retain tariffs on sensitive goods for a longer period of time, is being proposed as the whole negotiation process has been hampered by a Japan-U.S. dispute over whether Tokyo can retain tariffs on its sensitive farm products, the sources said.

The U.S.-led TPP basically aims for the abolition of all tariffs. The 12 countries have sought to allow each member nation to scrap tariffs within 10 years in principle.

However, Japan and the United States, the two biggest economies in the TPP framework, have yet to find common ground on how to deal with Japanese duties on key farm goods, including rice, and beef and pork, as well as the phase-out period for U.S. auto tariffs that Washington wants to maintain as long as possible.

If the TPP negotiating members give up on adopting the basic rule of scrapping all tariffs within 10 years, it could enable both Tokyo and Washington to set longer phase-out periods for their sensitive goods and eventually contribute to moving the broader negotiations forward.

However, industry observers fear that such a move would dent the quality of the envisioned TPP pact, which aims for the creation of comprehensive, high-standard trade rules.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza