Bilateral U.S.-Japan Outcomes

The Trans-Pacific Partnership (TPP) levels the playing field for American workers and American businesses, leading to more Made-in-America exports and more higher-paying American jobs here at home. By cutting over 18,000 taxes different countries put on Made-in-America products, TPP makes sure our farmers, ranchers, manufacturers and small businesses can compete — and win — in some of the fastest growing markets in the world. With more than 95 percent of the world’s consumers living outside our borders, TPP will significantly expand the export of Made-in-America goods and services and support American jobs.

U.S.-Japan Motor Vehicle Trade Non-Tariff Measures

The U.S.-Japan Motor Vehicle Trade provisions create groundbreaking new opportunities for U.S. automobile manufacturers in Japan. Non-tariff meas- ures (NTMs) in Japan have limited access for U.S. motor vehicle exports to Japan. As part of a broader effort in TPP to create a trading environment that further opens markets to U.S. motor vehicle exports and enhances the

American position as a center of global manufacturing, the U.S. has ad- dressed these barriers through bilateral negotiations with Japan in parallel with the broader TPP negotiations involving all TPP countries. Through long phase-outs of U.S. tariffs on motor vehicle imports, the TPP provides an expanded opportunity for U.S. firms to pursue these market-opening oppor- tunities prior to any reduction in U.S. tariffs.

Summary of Provisions

TPP creates substantive, enforceable reforms covering topics including the following:

Transparency

Japan’s regulatory process is opaque and offers inadequate opportunities for foreign input and access to information. To address this problem, the TPP provisions will ensure that the committees advising Japan’s regulators on significant regulatory issues operate in a transparent and open manner, with timely and public notice of their formation and of meetings, an opportunity for interested persons to participate in those meetings, and publicly avail- able information on proposals. The agreement also requires that there be a 12-month period before regulations requiring a substantial change to motor vehicle design or technology come into effect.

Standards and New Technologies

Japan’s unique standards impose high costs on U.S. automakers operating in multiple markets. In addition, Japan has unnecessarily delayed permission to sell vehicles with advanced technologies. To address these issues, Japan has agreed to accept certain U.S. motor vehicle standards. In addition, the agreement requires that introduction of vehicles that include new technolo- gies not be unduly delayed.

Preferential Handling Procedure

The Preferential Handling Procedure (PHP) is important to U.S. motor vehi- cle producers because it allows them to sell cars in Japan using faster, less costly certification procedures. Under the TPP, Japan has agreed that it will not make the PHP program more costly or complex, and that motor vehi- cles certified using the PHP program will continue to be eligible for financial incentives available to Japanese vehicles. As part of its entry to the TPP negotiations, Japan agreed to double the size of the PHP program.

Distribution

Japanese zoning rules for motor vehicle distribution and repair facilities have made it harder for U.S. firms to sell in Japan. The TPP provides that zoning rules maintained and applied by the central government will be applied in a transparent and non-discriminatory manner.

Safeguard

To address the potential for a surge of imports after tariffs are eliminated, the TPP includes a special automotive “safeguard measure” that will be available when an import surge causes or threatens to cause serious injury to U.S. producers.

Dispute Settlement

The TPP includes special, accelerated dispute settlement procedures to address agreement violations affecting motor vehicles, with stiff penalties including delaying U.S. tariff cuts and a duty snapback.

New Non-tariff Measures

The TPP includes a rapid consultation mechanism covering new non-tariff measures that may emerge, including those not yet adopted or published, in order to deter the adoption of new such measures.

Motor Vehicles Committee

A Motor Vehicles Committee is established to monitor implementation of the agreement and to consult to resolve issues.

Additional Actions by Japan

The above proposals will be part of the market access commitments of the U.S. and Japan under the TPP agreement. In addition, Japan has committed to the following additional actions:

  • Motor vehicle technical regulations, standards, and conformity assessment procedures. Adoption of several specific standards that are important to U.S. automakers.
  • Adoption of an optional method for simplifying Preferential Handling Procedure (PHP) certification procedures, and reduction of the frequency of testing requirements.
  • Acceleration of local and regional government zoning procedures.

New Features

Achieving a level playing field in Japan for U.S. auto exporters has been a key objective of the United States. To this end, the TPP includes:

Impact

U.S. automakers have faced a web of non-tariff measures, such as an opaque process for developing regulations, discriminatory financial incen- tives, a complex distribution system, unique standards, and costly, drawn- out certification procedures. In addition, past U.S. government efforts to address these measures have lacked dispute settlement procedures and a means of responding quickly to emerging issues to head off new non-tariff barriers.

The U.S.-Japan automotive negotiations address these concerns in new and more powerful ways, taking up the following systemic challenges:

Regulatory Playing Field

Leveling the playing field in Japan for U.S. motor vehicle producers through increased regulatory transparency and participation, eligibility for financial incentives, and facilitation of the establishment of new distribution and repair facilities.

Adoption of an optional method for simplifying Preferential Handling Procedure (PHP) certification procedures, and reduction of the frequen- cy of testing requirements.

Acceleration of local and regional government zoning procedures.

An accelerated dispute settlement mechanism with stiff penalties for violations, including delaying U.S. tariff cuts and a snapback on both auto and truck tariffs.

Commitments from Japan that will open up Japan’s regulatory process to foreign participation and reduce regulatory costs for U.S. motor vehi- cle producers.

A mechanism to head off new non-tariff measures.

Burdensome Standards that Raise Costs

Reducing costs for U.S. motor vehicle producers for exports to Japan through Japan’s adoption and acceptance of standards that are not unique to Japan, and through less burdensome testing and inspection requirements.

Procedures and Penalties for Violations

Establishing a special dispute settlement mechanism for motor vehicles with accelerated procedures and stiff penalties for violations of the agree- ment.

Meanwhile, TPP provides that U.S. tariffs on imports of Japanese autos and trucks will be phased out in accordance with the longest time period in the TPP negotiations. U.S. auto tariffs on Japan will remain in place for 25 years. U.S. truck tariffs on Japan will remain in place for even longer — 30 years. These tariff cuts will be back-loaded, meaning the majority of cuts take place years from now towards the end of the phase-out period. Japan agreed to this treatment in consultations with the United States in April 2013 before it joined the TPP negotiations. At that time, Japan also took the unilateral step of doubling the number of imported motor vehicles that may use Japan’s simplified certification method for foreign cars, known as the Preferential Handling Procedure.

Related Instruments

Japan: Parallel Negotations on Non- Tariff Measures

Non-tariff measures on a range of sectors such as insurance and govern- ment procurement have historically impeded market access for U.S. ex- porters, investors, workers, farmers, and ranchers. In April 2013, the United States and Japan agreed to begin negotiations on these non-tariff measures in parallel with Trans-Pacific Partnership (TPP) negotiations on the automo- tive and other sectors. Japan is taking a number of actions to address these measures through steps that will help to eliminate barriers to trade, improve transparency and provide greater opportunities for Americans to compete in the Japanese market.

Insurance

Japan is providing assurances and taking regulatory steps so that U.S. insur- ance companies have open access to Japan Post’s vast distribution network, and can compete on a level playing field and under equivalent conditions of competition with Japan Post as it goes public.

Express Delivery

Japan will improve transparency related to Japan Post’s express mail service business activities, by providing annual financial disclosures, and will take steps to facilitate customs treatment of express shipments through elec- tronic data submissions.

Transparency

Government-established advisory councils play a critical role in the Jap- anese regulatory policymaking process. Those advisory councils will be subject to greater transparency requirements, which will make it easier for U.S. firms to participate in the regulatory process and compete on an equal footing with Japanese firms.

Investment / M&A

Improved corporate governance standards, including those that strength- en requirements with respect to outside directors, will help to improve the environment for U.S. companies to expand business and invest in Japan.

Intellectual Property Rights

Along with TPP commitments on copyright term of protection, technolog- ical protection measures and enforcement, Japan will examine the appro- priate scope of the application of the private use exception with regard to works other than sound recordings and motion pictures from illegal sources, further improving Japan’s intellectual property regime for U.S. companies and artists.

Standards

The U.S. and Japan will establish a working group to facilitate trade in goods, including eliminating unnecessary technical barriers to trade and promot- ing regulatory cooperation and good regulatory practice, which will help to reduce costs and regulatory burdens for U.S. firms.

Government Procurement

Japan will take steps to prevent bid-rigging and to provide for greater trans- parency and participation in the bidding process, such as maintaining an open data portal website that makes information on prior government pro- curements publicly available, thereby increasing procurement opportunities for U.S. firms.

Competition Policy

Amendments to Japan’s Antimonopoly Law providing for independent review, access to evidence, and pre-order procedures will help ensure proce- dural fairness and transparency, and the Japan Fair Trade Commission will clarify its investigative procedures related to on-the-spot inspections and depositions by issuing new guidelines.

SPS

Japan will streamline the approval process for certain fungicides, complete its approval of internationally commonly-used food additives, and ease restrictions on imports of gelatin and collagen.

Related Instruments

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