US President Donald Trump and Japanese Prime Minister Shinzo Abe are expected to clinch a deal on farm tariffs and digital trade at a meeting in New York next week.
Full details of the agreement have not been disclosed, but some key elements about the pending agreement are expected:
Trump’s announcement of an initial deal earlier this week left unanswered questions over whether the agreement would deliver Japan one of the main prizes it seeks: a US pledge not to impose national security tariffs of up to 25 percent on Japanese vehicles and auto parts under Section 232 of US trade law.
Japanese Minister of Foreign Affairs Toshimitsu Motegi, who is in charge of talks with US Trade Representative Robert Lighthizer, has said he wanted to reconfirm in writing that the tariffs would not be imposed.
Japanese officials have said that under an agreement in September last year, the US would not impose added auto tariffs while trade talks were under way. Fresh assurances could echo the vague wording then that both sides would “refrain from taking measures against the spirit of this joint statement during the process of these consultations.”
Japanese auto exports account for about two-thirds of its trade deficit with the US and the added tariffs would deal a blow to Japan’s trade-reliant economy.
A preliminary deal announced on Aug. 25 included reduced US tariffs on unspecified industrial products, but Lighthizer said these did not include vehicles. Tokyo has sought removal of a US 2.5 percent tariff on autos and auto parts.
Japan is expected to agree to cut tariffs on imports of US beef and pork to about levels granted to signatories of the multilateral Trans-Pacific Partnership (TPP), officials have said.
Japan will permit low import tariffs on about 218,000 tonnes of US beef, with the quota covering about 90 percent of the amount Japan imports from the US, the Nikkei business daily reported, adding that it would eventually rise to 263,000 tonnes.
Lower tariffs would allow Trump to please US farmers ahead of next year’s presidential election. The farmers had been disadvantaged in Japan’s market after the US withdrew from the TPP after Trump took office in 2017. It would also let Abe keep a pledge to domestic producers.
Lighthizer last month said that wheat, dairy products, wine and ethanol would also benefit from the deal.
Washington is to make it easier for Japan to increase US-bound beef exports by scrapping an annual 200-ton (180 tonne) low-tariff quota, affording Japan the same beef trade status as Australia, New Zealand and Canada, Japanese media reported.
In announcing the initial agreement last month, Trump made reference to Japan’s decision to front-load planned purchases of US feed corn imports to cope with damage to its crop from an armyworm infestation.
However, Japanese officials said that the nation’s total feed corn imports would not increase.
Japan has agreed to phase out tariffs on US wine imports over five to seven years, about the same as the eight-year TPP time-frame, media reported, potentially cutting the cost of US wine by about 13 percent for distributors.
However, the amount of US rice that will be allowed to enter Japan tariff-free would be much less than the 70,000 tonnes accepted under the TPP, a Japanese source familiar with the matter said on condition of anonymity.
Japanese Minister of Finance Taro Aso has said that a currency provision aimed at preventing competitive devaluation would not be included in the final deal.
That demand by US lawmakers would tie Japan’s ability to intervene in currency markets should the yen spike and threaten the nation’s export-reliant economy.
US technology industry officials say they expect a digital trade agreement with Japan to be closely aligned with provisions in the new US-Mexico-Canada Agreement, which follow the US model for Internet development.
Those provisions aim to ensure the free flow of data across borders without taxation and limit governments’ ability to demand that firms disclose source code.
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