In what has been called a “mini-trade deal” or the “first stage” of a broader trade agreement, the United States and Japan have reached agreement in several areas of trade between the countries involving market access, reduced tariffs and digital trade. President Donald Trump announced that Japan will be liberalizing market access for certain U.S. agricultural goods and that the United States will be reducing or eliminating tariffs on the import of certain industrial goods from Japan. A separate agreement was concluded on digital trade, setting forth commitments to expand e-commerce and allow the free flow of data across borders.
Liberalizing Market Access
The agreement on market access will eliminate or lower Japanese tariffs or provide preferential country-specific quotas for a number of U.S. agricultural products, including:
- Reduced tariffs on fresh and frozen beef and pork.
- A country-specific quota for wheat and wheat products.
- Reduced Japanese government markup on imported U.S. wheat and barley.
- Elimination of tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli and more.
- Staged tariff elimination for products such as cheese, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products and tomato paste.
In return, the United States will (1) eliminate or reduce 42 tariff lines for agricultural imports from Japan, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum and soy sauce and (2) eliminate or reduce tariffs on certain industrial goods from Japan such as certain machine tools, fasteners, steam turbines, bicycles, bicycle parts and musical instruments. U.S. Trade Representative Robert Lighthizer has indicated that these tariff reductions will take effect on January 1, 2020. A fact sheet regarding the agriculture-related provisions of the trade agreement is available on USTR’s website.
Regarding the separate digital trade agreement, the countries have finalized a set of provisions addressing priority areas such as:
- Prohibitions on imposing customs duties on digital products transmitted electronically such as videos, music, e-books, software and games.
- Non-discriminatory treatment of digital products, including coverage of tax measures.
- Barrier-free cross-border data transfers in all sectors.
- Prohibition of data localization requirements, including for financial service suppliers.
- Prohibition of arbitrary access to computer source code and algorithms.
- Protection of firms’ flexibility to use innovative encryption technology in their products.
While the texts of the two agreements are not yet publicly available, joint remarks by Trump and Japanese Prime Minister Shinzo Abe announcing the agreements have been published. Both countries have indicated that negotiations will continue for a more comprehensive trade agreement.