Japan's Ministry of Finance will extend the "preferential tariff system" for imports from developing countries to developed and emerging market countries in 2019, Nikkei Chinese reported on the 25th. The applicable objects do not include categories that will have an impact on Japan's domestic industry, mainly including about 600 categories, such as clothing, mineral products and food. It will diversify import channels and cultivate the soil for free trade. As China and Brazil are excluded from preferential tariffs since the spring of 2019, the new system will continue to apply preferential tariffs to major categories to avoid a sudden increase in the burden on importers.

The Ministry of Finance will discuss the details at the tariff and foreign exchange review meeting to be held in October, and the tax investigation committee of Japan's ruling party will determine by the end of the year the results of the discussion on the revised outline of the tax system in 2018.

Of the about 6300 categories of tariffs imposed by Japan, about 3600 categories currently equivalent to more than half are subject to preferential tariffs. The mineral industrial products that account for a relatively high proportion are zero tariff in principle. Led by polyethylene terephthalate (PET), the most imported raw material for PET bottles, preferential tariffs are applied in a wide range. If the preferential system is applied, PET will generally reduce tariffs by 3.1 per cent, and tariffs on nonwovens used such as curtains will be reduced by 4.3 per cent.

The Ministry of Finance plans to expand the application of these preferential tariffs to the whole world, not only to developing countries, but also to developed countries and emerging market countries such as the United States, Europe and Asia. The relevant institutions will make adjustments in the near future to select categories that meet certain criteria such as "less domestic production in Japan".

The main reason for extending the application of preferential tariffs to developed countries is that with economic development, the preferential tariff system currently implemented for five countries, including China and Malaysia, will be abolished in the spring of 2019. At present, most of the categories of preferential tariffs are products imported from these five countries, and the amount of tariff reduction and exemption is about 33 billion yen. If no measures are taken, import tariffs such as China will all return to the normal rate, so importers are demanding to ease the drastic changes brought about.

The Ministry of Finance stipulates in the new system that after abolishing the preferential tariff system, while trying to keep the main import tariffs against these five countries unchanged, they will expand the preferential targets to the whole world and increase the number of importing countries in order to expand the scope of trade transactions.

In view of the substantial increase in imports from countries other than developing countries, efforts will be made to avoid losses to producers in Japan. In fact, the application of preferential tariffs will be reduced to 1/6 of the current concessionary object, that is, about 600 categories. However, it is expected that PET and other major mineral industrial products and agricultural and water products, which are already at the forefront of the import list, will be selected, which will not have a substantial impact on the industry and food enterprises that import these categories.

If it becomes a preferential object, the basic tax rate will be reduced to about the same level as preferential treatment, so products can be imported from the United States and Europe at zero tariff or much lower than ordinary tariff. Not only can import prices be reduced, but if taxes are exempted, the burden of customs duties and other affairs will also be reduced.

With the transition to the new system, importers will have more choices in procurement channels. For example, some industrial products and clothing previously imported from China and Thailand may be changed to European products. If there are more importing countries and price competition plays a further role than it is now, it is also expected to promote price reductions in daily necessities in the Japanese market, bringing benefits to Japanese household income and expenditure.