Oz-Japan FTA Expected to Lower Car Prices for Consumers
Executive Summary
The Australian auto industry has been calling for the removal of import tariffs on all imported vehicles. The FTA will come into effect later this year.
The price of Japanese vehicles in Australia is expected to fall as much as A$2,000 ($1,854) now that Australia and Japan have agreed on a historic free-trade agreement that ends the 5% Australian tariff on motor vehicles.
Australian Prime Minister Tony Abbott says the deal, seven years in negotiation, is of historic significance.
“This is the first time that Japan has negotiated a comprehensive economic partnership agreement or free-trade agreement with a major economy, particularly a major economy with a strong agricultural sector,” he says in a statement.
The deal is expected to be signed formally when Japanese Prime Minister Shinzo Abe visits Canberra in July. The FTA will come into effect later this year.
While the FTA focuses heavily on agriculture, given Australia’s role as a major producer, Japanese exporters will see Australian tariffs lowered on electronics, household appliances and cars.
The Australian auto industry has been calling for the removal of import tariffs on all imported vehicles.
Federal Chamber of Automotive Industries CEO Tony Weber says with the approaching end of local manufacturing, there is no rationale to maintain the 5% tariff on imported motor vehicles.
Australian Automobile Assn. CEO Andrew McKellar estimates removing the tariff could save the average buyer A$1,000-A$2,000 ($927-$1,854) of the cost of a new vehicle.
Abbott’s office says in a statement Japan is Australia’s second-largest export market and its second-largest trading partner.
Total two-way trade reached A$69.3 billion ($64.2 billion) in 2012-2013, for 11% of Australia's total trade.
Australian exports to Japan were valued at A$48.6 billion ($45 billion), accounting for more than 16% of all Australian exports. Japan is Australia’s largest market for liquefied natural gas at about A$14 billion ($12.97 billion).
Australia imported A$20.6 billion ($19.1 billion) from Japan in 2012-13 with goods imports, including vehicles, accounting for A$18.3 billion ($16.95 billion).
