Background Paper – Japan Automobile Imports Association, Government Policy to expand automobile import

The Japanese economy was centrally controlled during the postwar period, and passenger car import was not liberalized until 1965. Tariffs lowered in 1978 making Japan the only advanced industrialized nation by abolishing all import restrictions and tariffs.

Foreign countries facing serious employment problems criticized Japan with a reaping trade profit for the closed market, and demanded to open it.

Therefore, the expansion of import became a major national priority in Japan. Import expansion measures included four economic packages that have been introduced since 1992 and that in 1994 the government adopted a foreign economic reform master plan which was called for further efforts to increase import carrying out an import expansion action plan.

The main import expansion measures relating to automobiles are described as below.

Tax system for promoting product import

This system was introduced as a core of general import promotion measures for the purpose to fill the deficit caused by expansion of import with such systems as accumulation of market development fund, tax deduction and additional depreciation system. Initially, the government planned to implement the system over a three-year period, but it has been extended each time and will continue to be implemented until March 2002. The system also applies to some types of automobile parts. However, the accumulation of market development reserve was abolished in March 1997. In 1999, the system of an increase in the limit amount of tax deduction and of additional depreciation was abolished.
 

Finance Policy by JDB and EXIM

The Japan Development Bank established an "Imported Facilities Enhancement" loan to provide funds for the acquisition and improvement of sites and facilities for use in import expansion while the Export-Import Bank of Japan created a system of "Loans to Promote the Import of Manufactured Goods," under which finance is provided for the importation of manufactured goods. Finance policy under these schemes is provided with favorable interest rates.
 

Import promotion Plans Targeted Toward Assembled Vehicles and Parts

The automobile sector is in focus of particularly strong pressure on improved market access. Since 1993, the government has positively intensified implementing concrete import promotion projects through Japan External Trade Organization(JETRO). Those programs include imported automobile shows in major cities and test-ride events (held jointly with JAIA) as well as an establishment of permanent imported automobile showrooms, automobile parts missions, provision of training about "design-in" system and support of parts conferences.

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