Japan proposes free trade on cars

Reviewed By Hitoshi URABE

Article:
"Japan proposes free trade on cars"
http://asia.cnn.com/2002/BUSINESS/asia/09/12/japan.cars/index.html
CNN

Comments:

Instead of being a silent partner, as was often the case in the past, Japan this time at the Doha round of WTO negotiations is actively proposing an idea, that for the major industrialized countries to eliminate tariffs on digital home appliances and automobiles.

Many industrialized countries, including Japan, are in the defensive position at WTO negotiations to open up its market for agricultural and other low-tech products to the developing countries. Due to this conflict, the talks are reportedly progressing very slowly, if at all. Japan's proposal dodges this standoff by suggesting the industrial countries to go ahead in freeing up trade where they can. The idea is to utilize a fast path, where the normal route is for everyone to proceed in concert, for those who are prepared would use a bypass to lead the pack.

This type of agreement within the WTO framework has precedence, as briefly introduced in the article. IT related products such as IC's and semiconductors are agreed among the industrialized sector of WTO members, 56 countries at present, to be generally free from tariffs. The agreement has encouraged trade, and thus growth, of the countries involved. Japan's suggestion this time intends to merge the treatments of digital home appliances and automobiles with that of IT related products.

It might worth noting that that the proposal is not necessarily an egotistic claim of Japan or the Japanese industry. For example, out of five major automobile manufactures in Japan, three are foreign owned. While the majority shareholders of Toyota and Honda is domestic, Nissan, Mazda, and Mitsubishi are all foreign owned, Renault, Ford, and DaimlerChrysler being the majority owners respectively, and each with a foreigner serving as the CEO. Furthermore, out of three major truck manufacturers, Isuzu is controlled by GM, and Fuso is rumored to be owned by DaimlerChrysler, which leaves only Hino as the domestic company.

Accordingly, freeing up the automobile market in the world would not only benefit the factory workers in Japan, but also the foreign investors as well, by widening the room for strategic options they may pursue. Of course, as always, it would benefit the consumers in those countries lowering or abolishing the tariff.

One of the characteristics of the talks at WTO, compared to previous trade negotiations, is that once a set of agreement is established, the member countries must accede to the whole and are not allowed to agree to a part of it. This was necessary and also very effective in implementing the agreement uniformly, but it also made it very difficult to reach an agreement in the previous rounds of discussions at WTO and its predecessor GATT. This time is no exception. Those involved in the negotiation must be patient and persistent, as the approach adopted by WTO has been proven effective in promoting trade and creating wealth globally. It is hoped that Japan's proposal could also act as a stimulus to start the ball rolling again.