Japan to remove China from preferential tariffs

Updated 2016-11-25 09:56:36 Global Times

Bilateral cooperation can support global growth: MOFCOM

China and Japan are vital economic and trade partners, and they can be expected to beef up cooperation and make contributions to world economic growth, noted Shen Danyang, spokesman of the Ministry of Commerce (MOFCOM).

Shen's remarks came after Japanese media reported that Japan will remove five countries, including China, from a preferential tariff framework due to their economic development.

The other four are Malaysia, Thailand, Mexico and Brazil, and the change will take effect in fiscal 2019, the Nikkei Asian Review (NAR) reported on November 18.

"China is still the largest developing country. Although China is the world's second-largest economy, the country's per capita GDP, urban and rural regional development and its social welfare still lag far behind developed countries and regions, and the realization of China's modernization still has a long way to go," Shen told a press conference in Beijing on Thursday.

Given the sluggish global economy as well as the weak world trade and investment situations, China and Japan should join force to deepen cooperation, which is in line with their bilateral interests, the MOFCOM spokesman said.

As the two economies are complementary, China and Japan are expected to step up efforts to advance their economic and trade ties, he noted.

Starting in the 1970s, Japan provided the generalized system of preferences, a form of support for developing economies, by imposing minimal to no duties on selected industrial products.

Japan's reduced tariffs now apply to about 140 countries and regions, according to media reports.

The NAR report said that the five countries to be taken off the list account for 30 billion yen (2 million) of the 33 billion yen in revenue Japan loses from the tariff framework. The report did not specify during what period Japan would lose such amount of revenue.

Economies are removed from the list if they are classified as high-income economies by the World Bank for three consecutive years, the report said.

"Japan adopted this system involving its trading partners as a way to raise revenue, which is not a small amount, to ease its fiscal position,"Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Thursday.

In recent years, Japan has felt pressure from China's economic growth, as well as from the expansion of Mexico and Brazil, which are large developing countries in Latin America, Chen said.

"Mexico has become a member of the Organisation for Economic Co-operation and Development, while Thailand and Malaysia are still developing countries and there is no reason to remove them from the list," Chen said.

Removing the five countries does not violate any world trade rules as it is a voluntary form of support offered by Japan to developing countries and regions, said Tu Xinquan, deputy dean at the China Institute for WTO Studies at the Beijing-based University of International Business and Economics.

Tu told the Global Times Thursday that Japan was following the lead of the EU, which scaled back preferential tariffs to China in 2015.

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