Japan to Keep Reduced Tariffs on Imports from China, Brazil

Japan's Finance Ministry plans to expand the preferential tariff program as early as fiscal 2019 to prevent a spike in import levies on goods from China and other key trade partners.

The expansion would cover roughly 600 items from emerging and advanced economies, excluding goods that could harm domestic industries. As of now, China, Brazil, Mexico, Thailand and Malaysia are set to lose their preferential tariff status in spring 2019 due to their economic development.

The program was introduced in 1971 to support economic growth in developing nations, covering products from 140 countries and regions as of April. About 400 agricultural and fisheries goods imported by Japan enjoy reduced rates, while tariffs are reduced to zero for some 3,200 industrial imports.

For instance, Japan waives its 3.1% duty normally applied to polyethylene terephthalate, a plastic used to make beverage bottles, if the material is imported from a country covered in the system. The 4.3% tariff on nonwoven fabrics, whose uses include curtains, also becomes zero under the program.

Most of the targeted goods are imported from the five countries that are set to "graduate" from the preferential tariff program. Around 1 trillion yen ($8.99 billion) worth of imports qualified for the tariff reductions in 2015, slashing import duties by an estimated 33 billion yen. Fearing a huge hit, Japanese importers are urging the government to prevent such a sudden change.

In addition to keeping the tariff rates low for the five countries, the Finance Ministry looks to broaden the sources of major imports by covering industrialized nations.

The ministry will work to prevent any impact on domestic producers by limiting the number of items subject to the expansion to 600. But products that account for the bulk of Japanese imports in value terms are likely to be covered.