Thoughts on Free Trade

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Thoughts on Free Trade
Osamu Nagata
Managing Officer, Toyota Motor Corporation
(Chairman, International Affairs Committee,
Japan Automobile Manufacturers Association)
1
Two questions I wonder about
1. Is Japan’s auto market really closed?
2. Do the taxes levied on vehicles in Japan
constitute a non-tariff trade barrier to
overseas companies?
2
1. Is Japan’s auto market really
closed?
Import duty rates compared
Passenger
cars
Trucks
Japan
0%
0%
USA
2.5%
25%
3
1. Is Japan’s auto market really
closed?
Share of Japanese market by country (2010)
European firms 4%
Share of US market by country (2010)
US firms
European firms 8%
Other firms
Japanese firms 40%
Japanese firms
96%
US firms 45%
South Korean firms 7%
Source: “The Trans-Pacific Partnership FTA & Japan” (American Automotive Policy Council, Nov. 28, 2011)
4
Products
Japan’s auto market by engine displacement and offered models (2011)
Source: Response
Source: Response
2,000cc or less
US models
European models
2,001cc to 3,000cc
US models
3,001cc or more
European models
US models
European models
Source: JAMA data
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Marketing
Companies exhibiting in 2011 Tokyo Motor Show
European firms
US firms
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Is sales performance a true indicator of
whether a market is open or closed?
• Sales results can be seen as the result of a
company’s total effort in product development,
marketing, etc.
• Pointing out specific practices believed to be nontariff trade barriers will make possible constructive
talks toward promotion of free trade.
Example: European Commission list of 31 non-tariff
barriers
7
2. Do the taxes levied on vehicles in Japan
constitute a non-tariff trade barrier to
overseas companies?
• The European Automobile Manufacturers’
Association requested Japan to take action
regarding 6 non-tariff barriers.
• One area is “Kei” light motor vehicles
– Taxation system on “Kei” and regular vehicles
⇒ Even though it is the same for domestic and
overseas companies…
8
Situation overseas:
Taxes on gasoline and diesel fuel
• In Europe (notably France and Germany) there is a large gap between
gasoline and diesel fuel taxes.
Sept. 2007
(India: 2006)
Gasoline and diesel fuel prices
Tax
Fuel
US$
China and India are
shown for reference
India (diesel)
India (gasoline)
China (diesel)
China (gasoline)
US (diesel)
US (gasoline)
Canada (diesel)
Canada (gasoline)
Japan (diesel)
Japan (gasoline)
UK (diesel)
UK (gasoline)
Spain (diesel)
Spain (gasoline)
Italy (diesel)
Italy (gasoline)
Germany (diesel)
Germany (gasoline)
France (diesel)
France (gasoline)
Source: Nomura Research Institute, “Kankyo jidai no jidosha pawa torein
senryaku” (Automobile power train strategies for an environmentally
conscious age), March 2009
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Diesel vehicle ratio in each country
Spain
France
Italy
Ratio of
diesel
vehicles
(%)
Germany Data:
· Diesel vehicle ratio in Europe:
UK
India
US
China
(2005: 1.3%) Japan
AAA (Association Auxiliaire de
l’Automobile)
· Diesel vehicle ratio in Japan and US:
JATO Dynamics
· The diesel vehicle ratios in European
countries and Japan are for passenger
cars.
· The diesel vehicle ratio in the US is
for passenger cars and light trucks
under GVW3.5t.
Price difference (gasoline vs. diesel) in US$
Source: Nomura Research Institute, “Kankyo jidai no jidosha pawa torein
senryaku” (Automobile power train strategies for an environmentally
conscious age), March 2009
⇒ Do the taxation systems in each country bias their market?
⇒ To what extent should opinions and criticism of domestic tax
systems in partner countries be allowed in promoting free trade?
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