On Monday, October 7, the US and Japan have signed a trade deal. Regarding the deal, Prime Minister Abe Shinzo and Chief Trade Negotiator Toshimitsu Motegi described it as a ‘win-win’ trade.
Accordingly, the long-awaited trade deal is chiefly pertinent to agricultural and digital sectors. While the deal is remarkably beneficial for US, US farmers in particular, considering their move to quit Trans-Pacific Partnership (TPP), it is arguably less contributory to Japan.
In one of the deals, Japan agreed to eliminate or, at the very least, lower tariffs on approximately USD 2 billion worth of US pork and beef.
Furthermore, additional products will also benefit from the deal, such as wine, frozen potatoes, oranges, fresh cherries, cheese and whey, ethanol, egg products and tomato paste.
In return, Washington agreed to cut tariffs on USD 40 million worth of Japanese agricultural products. This, in addition, permits Japan to reach wider US markets.
Also, the US, in another trade, will send ’emergency’ corns to Japan as an additional trade deal. In response to this, PM Abe thinks that this is necessary for Japanese corn production was heavily suffering from pests.
As for the digital sectors, both parties formed an agreement to eradicate tolls on myriad digital products. The products include videos, music, and ebooks.
However, as salient as it might be, no agreement is pertaining to Japanese auto. The 2.5% tariffs on Japanese autos and its pertinent products remain in effect.
The Significance of US-Japan Trade Deal
Reflecting upon the foregoing, the US has more advantages over the trade than Japan. Despite the not-equally-reciprocal conclusion, both parties have come into an agreement.
For Japan, the deal enables the country to target a more vast US markets. Especially, in terms of agricultural products such as rice, Japan will possess a better opportunity to strengthen its influence.
Meanwhile, for the US, the agreement has brought numerous benefits. For instance, for US farmers, the deals help them to recover from loss induced by US-China trade war and Washington’s intentional decision to quit TPP.
As for Trump himself, the deal might skyrocket his electoral advantages in the upcoming US presidential election. This attempt might notably help him win votes from the citizens for his acts to recover agricultural disadvantages.
However, the same thing does not apply to Japan in the field of auto industries. To be precise, Section 232 of the Trade Expansion Act regulates that there will be no abolition of the existent auto tariffs.
That said, Japanese auto manufacturers do not worry about the existent auto as much as the possibility of additional tariffs. Reportedly, the US ‘threatened’ Japan with additional tariffs on auto if Tokyo happens to ignore the trade agreement.