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Japan proposes free trade on cars

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Japan does not charge tariffs on cars and trucks, and the United States charges only on trucks, but Europe has duties  

GENEVA, Switzerland (Reuters) -- Japan on Thursday proposed that richer countries in the World Trade Organization (WTO) aim to agree by the end of 2004 to drop all tariffs on cars and trucks, creating a virtually free global automobile market.

The proposal, which Tokyo negotiator Tetsuro Kai said could be extended to other key products, came at the start of discussions in the WTO's Doha Round on slashing customs duties and other barriers to trade in goods.

"We wanted to give the negotiations a kick-start," Japanese trade envoy Shingo Yamagami told a news briefing. "We need to get them rolling as soon as possible."

Kai said the so-called "zero-for-zero" tariff idea covered passenger cars, trucks and auto parts -- a trade in which Japan is the world's second-largest exporter and has a long history of disputes, especially with the United States.

"Zero-for-zero" in trade jargon means an agreement in which two or more countries agree to remove all tariffs on a specific category of goods. Its application to automobiles could be expected to reduce prices to the consumer, especially in Europe.

Mainly affecting Europe

Japan itself already has no tariffs on passengers cars, trucks and parts, and although the United States, its major export market, also imposes no duties on cars, it has a tariff of 25 percent on trucks.

The European Union, however, where member country Germany is the world's biggest auto exporter, imposes duties of around 10 percent on passenger vehicles, 22 percent on trucks and five percent on parts.

There was no immediate formal reaction from other trade envoys to the Japanese proposal, but Yamagami said U.S. negotiators in Thursday's talks had described the package as "thoughtful".

The proposal said the market access negotiations in the Doha Round, due to be concluded by January 1, 2005, should look at whether the zero idea could be applied to other globalize industries in countries where they were well developed.

Japanese officials said they were in discussion with national industry chiefs on what other major sectors could be included, but no decisions had yet been taken.

Countries like Brazil welcome

Hideo Suzuki of the Ministry of Economy, Trade and Industry (MITI), said auto-producing developing countries such as Brazil might like to join the talks, adding: "We would welcome them."

But the proposal, the first comprehensive package tabled by a major power for the market access talks, said smaller consumer items such as digital cameras, electronics, bicycles, glass, toys and watches should also be considered for zero tariffs.

The package compiled by Japan - under pressure from poorer countries in the Doha Round's agricultural liberalization talks to cut back its huge subsidies to farmers - also suggested harmonizing tariffs on textiles and clothing.

This idea - clearly aimed to attract developing economies who are seeking better access to rich country markets for these products - could lead to agreements on identical tariffs for specific types of goods.

Japan said it also wanted to see more countries joining the stalled WTO talks on a pact to abolish all tariffs on information technology products. Currently only 57 of the WTO's 144 members are involved.

But MITI's Suzuki said Tokyo's real wish was to see the IT negotiations become part of wider talks on dropping all tariffs on consumer products. "That is what we would like, but we are realists," he added.




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