Japan Reviews Its Trade Preferences For China

by Mary Swire, Tax-News.com, Hong Kong

03 January 2011

The Ministry of Finance has disclosed that, following a review of its preferential trading scheme to support developing countries, Japan may increase tariff rates on the importation of some 450 products from China.

Under Japan’s Generalised System of Preferences (GSP), which is authorized until March 31 this year, and is aimed at contributing to the economic development of developing countries, certain of their products are able to enter Japanese markets at reduced or free rates of import duty.

Despite the current size of China’s economy and its position as Japan’s largest trading partner, China is still classified as a developing country under the GSP and, therefore, a GSP beneficiary.

However, within an ongoing review of the GSP before its scheduled renewal, Japan is believed to have decided to remove from its GSP list a product of any country if it has contributed over half of Japan’s imports of that product in the last three years. Such a policy, if approved by parliament, is targeted at providing space for other developing countries’ products to become more competitive.

While Japan provides reduced GSP tariffs to 140 countries and 15 territories, data shows that China took over 85% of its benefits in 2009. If Japan confirms the change in its GSP policy, it is said that tariff increases could be seen on some 450 items Japan presently imports from China, including plastic household goods, toys, clothing and some industrial products.

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