Fill me in:
After trade talks kicked off at the Ministerial level this April, the U.S. and Japan this week finalized a partial trade agreement. It will further open Japanese markets to American agricultural goods, cut some U.S. tariffs on some industrial goods, and set new digital trade rules.
Why does it matter:
The U.S. and Japan are the world’s first and the third-largest economies, respectively.
Japan has made agreements with the European Union and several Asia-Pacific nations, allowing businesses in those countries to have preferential access to the Japanese market. This agreement will allow U.S. farmers and ranchers, in particular, to compete on a more level playing field, and the digital trade provisions will help companies in diverse sectors.
Numbers to know:
- $217.6 billion. Japan is the U.S.’s fourth largest trading partner with $217.6 billion in goods and services traded between the two countries in 2018, according to the Office of the United States Trade Representative.
- $120.4 billion. The U.S. exported $120.4 billion in goods and services to Japan in 2018.
- $13 billion. Japan is the U.S.’s third largest export market for agricultural products with $13 billion shipped in 2018.
- 323,000. Exports to Japan supported 323,000 American jobs as of 2015, according to the International Trade Administration.
The U.S. Chamber hopes this is just the first step toward a comprehensive trade agreement benefiting American companies and workers.
“Today’s news will spur economic growth and boost sales on both sides of the Pacific, especially for American farmers and ranchers and the digital economy. However, it’s not enough. The Chamber strongly urges the administration to hold fast to its commitment to achieve a comprehensive, high-standard trade agreement with Japan that addresses the full range of our trade priorities, including services, intellectual property protection, and regulatory barriers to trade. A comprehensive trade deal with Japan would provide some much-needed predictability – not only for the U.S. and Japan but for all our trade allies. Now is the moment for our countries to work together to restore stability to the rules-based global trading system.” – Myron Brilliant, Executive Vice President and Head of International Affairs, U.S. Chamber of Commerce.
We expect this initial trade deal to go into force on or around January 1, 2020, if the Japanese Diet approves it later this year. Congress does not need to approve it.
This is just a first step toward what we hope will eventually be a comprehensive, platinum-standard trade agreement with Japan. America’s most competitive industries depend on clear trade rules, dispute settlement mechanisms, and good regulatory practices to compete on a global scale.
Such an agreement would address the full range of U.S. trade priorities from services and intellectual property protection to regulatory barriers to trade.