The U.S.-Japan deal has been a long time coming. And, despite the excitement, it’s still not here yet.
On Wednesday, Sept. 25, President Donald Trump and Japanese Prime Minister Shinz? Abe signed a joint statement to “confirm and welcome final agreement” on the United States-Japan Trade Agreement and the United States-Japan Digital Trade Agreement. The two agreements focus heavily on agricultural and technological trade respectively between the two countries.
The joint statement was signed on the sidelines of the United Nations General Assembly meeting Sept. 23-30 in New York City, NY. Images of the two leaders signing or holding signed documents, including the one used below, depict the signing of the joint statement, not the agreements themselves.
The joint statement noted that the leaders “share the desire that these agreements will be signed at the earliest possible date and enter into force in the very near future, following the completion of our respective domestic procedures.”
“The United States-Japan Trade Agreement will eliminate or reduce tariffs on certain agricultural and industrial products to enhance bilateral trade in a robust, stable, and mutually beneficial manner between our nations, which together account for approximately 30 percent of global gross domestic product,” read the joint statement in summary.
“The United States-Japan Digital Trade Agreement establishes high-standard rules in this area, demonstrating the continued leading role that both nations play in global rule-making on digital trade.”
The joint statement went on to outline future expectations, including the intention to “conclude consultations” within four months. These consultations will be followed by negotiations “in the areas of customs duties and other restrictions on trade, barriers to trade in services and investment, and other issues in order to promote mutually beneficial, fair, and reciprocal trade.”
A factsheet released by the Office of the U.S. Trade Representative (USTR) described the leaders as having “reached agreement on early achievements from negotiations in the areas of market access for certain agriculture and industrial goods, as well as on digital trade.”
The USTR fact sheets on the two agreements claims that exports of fresh and frozen U.S. beef into Japan will see reduced tariffs. Beef offal specifically will see “staged tariff elimination.” Beef items will be subject to “the limited use of safeguards by Japan” against import surges. The USTR fact sheets also say “American farmers and ranchers will have the same advantage as CP-TPP countries selling into the Japanese market.”
“The U.S.-Japan Trade Agreement will provide America’s farmers and ranchers enhanced market access in our third largest agricultural export market. When implemented, this Agreement will enable American producers to compete more effectively with countries that currently have preferential tariffs in the Japanese market.”
Industry reactions
Considering the importance of the Japanese market to U.S. beef exports and agricultural exports overall, the announcement was met with immediate praise from industry.
“Japan is the No. 1 export market for U.S. beef, accounting for one quarter of our exports,” said National Cattlemen’s Beef Association (NCBA) President Jennifer Houston in the group’s official response.
“The only way for U.S. beef producers to remain competitive in our leading export market is to remove trade barriers through a bilateral trade agreement with Japan. NCBA thanks President Trump for his continued support in removing trade barriers on U.S. beef, and we encourage the United States and Japan to sign and implement the bilateral trade agreement as soon as possible.”
She noted that the tariff disadvantage the U.S. has faced for several years—38.5 percent compared to the 26.6 percent tariff enjoyed by beef competitors like Australia, Canada, Mexico, and New Zealand—has limited U.S. beef’s market share in Japan.
“Removing that tariff allows more Japanese consumers to enjoy more U.S. beef at a more competitive price. Today’s announcement is welcome news for American families who produce U.S. beef and Japanese families who purchase it.”
U.S. Meat Export Federation President and CEO Dan Halstrom thanked the Trump administration for prioritizing trade negotiations with Japan.
“With Japan being the largest value destination for U.S. pork and beef exports (combined export value in 2018 was $3.7 billion), there is no market more critical to the profitability and prosperity of the U.S. red meat industry.
The American Farm Bureau Federation’s Senior Congressional Relations Director Dave Salmonsen described the move as leveling the playing field for U.S. ag.
“If the Japanese Parliament does everything they need to do this fall we could see this agreement go into effect on Jan. 1. And this will also be a really good signal for other countries we are negotiating with that the U.S. can close out trade agreements.”
Word from Japan
Following the signing of the joint statement on the trade deals, Japanese news media variously reported Abe calling the deals a “win-win” and trade experts having mixed reactions to the deal.
A Sept. 26 report by The Japan Times, the country’s oldest English-language newspaper, quoted Masahiko Hosokawa, a former trade ministry official, saying “Japan was completely overmatched … in negotiations that were designed by the U.S. side to appeal to Trump voters as he seeks reelection.”
Hosokawa was additionally quoted as calling the deal meaningless without the elimination of the auto tariffs.
Other Japanese news reports have highlighted the concerns of the Japanese auto industry over the supposed detail the agreements won’t eliminate tariffs on exports of Japanese cars to the U.S. Though neither the joint agreement nor the USTR’s fact sheets discuss exports of Japanese vehicles to the U.S., Japanese news outlets last week reported that tariffs would stay at 2.5 percent and that U.S. had promised not to raise them for now under the deals. — WLJ
