III. Current and Future Non-Tariff Barriers (Other than Currency Manipulation)
Existing Barriers. Japan will agree to eliminate all existing non-tariff barriers in the auto sector, including auto parts.3 These barriers have included: a discriminatory system of taxes; onerous and costly vehicle certification procedures for imported automobiles; a complex and changing set of safety, noise, and pollution standards, many of which do not conform to international standards and add significant development and production costs for automobiles exported to Japan; an unwillingness by Japanese dealerships to carry foreign automobiles and insufficient enforcement of competition laws to address anti-competitive practices; zoning restrictions that make it difficult, if not impossible, to establish new dealerships in important markets; and exclusionary consumer preferences shaped by decades of government policies directed at promoting the national car companies.
Future Barriers. Japan will agree to effective mechanisms to avoid adopting new non-tariff barriers, and to immediately address new concerns with existing measures.4 For example:
- Proposed Measures. If the United States objects to a proposed measure5 and establishes prima facie evidence to a dispute settlement panel6 that the measure is either inconsistent with the TPP agreement or otherwise nullifies or impairs any benefit accruing to the United States directly or indirectly under the agreement, Japan will not implement the measure until the matter is resolved either through negotiations or dispute settlement.
- Non-Violation Nullification and Impairment. If a proposed measure is implemented and, although not inconsistent with the agreement, results in the nullification or impairment of the benefits of the agreement to the United States, the United States would be authorized to suspend its concessions in an amount equivalent to the level of nullification or impairment, or to utilize the “snapback” provision (or, if the snapback provision cannot be implemented because the U.S. tariff has not been eliminated, to extend the period of time before the auto/truck tariff is eliminated).
He also wants the U.S. tariff phaseout schedule to be tied to Japan's "import penetration rate."
Conceptually, some of this is quite interesting. How can trade rules deal with the private actions of Japanese car dealers or consumer preferences? What about zoning restrictions? Is it possible to have challenges to proposed measures, with some sort of "injunction" imposed? Do we really want to toughen the non-violation remedy?
Beyond any theoretical discussion, though, this has the feel of 1980s and 1990s trade rhetoric regarding Japan. As I recall the 1990s version of these issues, not much came of the U.S. claims (but I'm biased, having worked for a law firm representing Japanese clients on these issues, so feel free to ignore what I say). It will be interesting to see what, if anything, happens this time.