Japan and the United States have agreed in principle to an outline of a free trade agreement, with plans to complete it by September.
The announcement, which calls for negotiations on a bilateral trade deal, was made 25 August by Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump on the sidelines of the G7 meeting taking place in Biarritz, France.
“We still have some remaining work that has to be done at the working level, namely finalizing the wording of the trade agreement and also finalizing the content of the agreement itself. But we would like to make sure that our teams would accelerate the remaining work for us to achieve this goal of realizing the signing of the agreement on the margins of the U.N. General Assembly at the end of September,” Abe said in a press conference, according to a White House statement.
The agreement would further link the first- and third-largest economies in the world, with total trade between the two countries of USD 297.5 billion (EUR 267.9 billion) in 2018. The U.S. exported USD 75 billion (EUR 67.5 Million) in goods to Japan in 2018 while importing USD 142.6 billion (EUR 128.4 billion) in Japanese goods. Japan is both the fourth-largest market for the U.S., as well as its fourth-largest supplier of goods.
In comments made at the press conference, Trump said the agreement will help U.S. agricultural exports in particular.
“The deal is done in principle,” he said. “And we’re very far down the line. We’ve agreed to every point, and now we’re papering it and we’ll be signing it at a formal ceremony.”
U.S. Trade Representative Robert Lighthizer added the agreement will result in “substantial reductions in tariffs and non-tariff barriers across the board.” He singled out the U.S. digital products, beef, pork, wheat, dairy, wine, ethanol, and corn industries as those that stand to benefit.
“it’s very good news for our farmers and ranchers, but it’s also good news for those who work in the digital e-commerce space where it is the gold standard of an international agreement. This is an area that not only has been important to the President but been of particular importance to the Prime Minister,” Lighthizer said. “So we’re very excited about this agreement. We look forward to finishing the additional work and having it be implemented as soon as possible in Japan and the United States.”
The Trump administration previously placed a 10 percent tariff on Japanese aluminum and 25 percent tariff on Japanese steel, and Trump has threatened to add tariffs to cars made in Japan. But at the press conference, Trump said he would not be adding those tariffs as part of the deal.
On Monday, 26 August, several Japanese economists criticized Abe’s agreement to the new deal, arguing it gives too much away to the United States, according to Reuters.
“It’s hard to say whether the deal is a favorable one for Japan” unless it receives an exemption from future auto tariffs, sMizuho Research Institute Senior Research Officer Junichi Sugawara said. “The U.S. could make harsher demands ahead. When that happens, Japan doesn’t have any cards left,” he said.
Photo courtesy of Ministry of Foreign Affairs of Japan Cabinet Public Relations Office
