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U.S. and Japan Working Toward Limited Trade Agreement

The United States and Japan are reportedly accelerating efforts to finalise a limited trade agreement in time for it to be signed later this month. President Trump has signalled that this initial deal will not need to be approved by Congress but that the two sides intend to work toward a more comprehensive agreement as well.

Although nothing official has yet been released and negotiations are still on-going, press sources indicate that the U.S.-Japan agreement is generally expected to include the following:

  • increased Japanese purchases of agricultural products from the United States and a gradual lowering of Japanese tariffs on U.S. beef and pork;
  • an increase in, or elimination of, the U.S. tariff-rate quota for Japanese beef, which currently allows up to 200 tonnes to enter the United States at a duty of 4.4 cents/kg;
  • the elimination of Japanese tariffs on U.S. wine within five to seven years; and
  • lower U.S. tariffs on Japanese machinery and other industrial goods.

While Japan is also pushing the United States to drop its threat to impose 25 percent additional tariffs on Japanese cars over national security concerns, the White House has given no public indication as to whether it will do so. In addition, Japan is said to have rejected demands to increase its TRQ on U.S. rice and include a provision on currency devaluation.

In a 16 September notice President Trump said the agreement would be signed under section 103(a)(2) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, which press sources say allows the president to address tariff barriers by proclamation. A planned separate executive agreement with Japan on digital trade would also not require congressional approval. Trump added that he will continue to work with Congress on “further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade” between the two countries.

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