Japan Likely to Raise Tariffs on Chinese Imports

Japan is likely to remove more than 400 Chinese imported items from a list of products that are given preferential tariff treatment, Japanese government sources said on December 28, 2010.

A delisting would impose higher tariffs on those Chinese products. Japanese government's preferential tariff system was introduced in 1971 to aid less-developed countries through lower tariffs on their exports.

The expected move comes as China is believed to have replaced Japan as the world's second-largest economy. Given China's position as a new global economic power, Japan has no reason to continue treating Beijing favorably under the system, according to observers.

However, increasing tariffs on Chinese imports could lead to a rise in those products' retail prices, adversely affecting people in this country.

The current system applies to 3,552 of the 5,930 items imported from other countries, including China.

Japanese government plans to submit a bill to revise the Law on Temporary Measures Concerning Customs, which designates imported items covered by the preferential tariff system.

Japanese government aims to enact the revised law on April 1, 2011. The review will increase the number of imported items from China to be excluded from the range of preferential tariffs from the current 13 to about 450, according to the sources. Tariffs on those import items will rise accordingly.

The items to be excluded mainly will be Chinese imports that hold a 50 percent or higher market share in their product categories.

Items set for higher tariffs likely will include a wide variety of goods, such as plastic home appliances, toys, other daily goods; scarves, mufflers, gloves and other clothing; and matsutake mushrooms, processed eels and other agricultural and fisheries products.

Among industrial products, hydrazine, which is used as a foaming agent in resin, and copper powder, used to manufacture electric appliances, will be subject to the envisioned higher tariffs.

However, such tariffs will be raised only by several percentage points on average because some products have not been subject to tariffs to date.

In fiscal 2009, Japan imported 1.6 trillion yen worth of products from developing countries under the preferential tariff system. Accompanying China's rapid economic growth, imports under the system from that country drastically increased.

In fiscal 1999, such imports from China totaled 700 billion yen and accounted for 39.7 percent of all imports under the preferential tariff system.

In fiscal 2009, the figures rose to 1.3 trillion yen and 86.1 percent, respectively.

With China essentially monopolizing the system's benefits, a Finance Ministry official said, "The system's original purpose, which was to assist as many developing countries as possible, has not been achieved."