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USTR Releases Text of US-Japan Trade Mini-Deal

The U.S. and Japan officially signed their initial trade deal during a brief signing ceremony at the White House on Oct. 7, setting up a potential Jan. 1 effective date. The text of the new deal is now posted to the Office of the U.S. Trade Representative's website. So is the text of a concurrent deal on digital trade.

Nearly 250 tariff lines of Japanese imports will have their duties eliminated immediately or eliminated or reduced in stages, including machine tools, Yamaha pianos, and televisions.

Some imports will see tariff elimination over 10 years; some over two or five years; and some will stay at 50 percent of current rates once the reduction arrives there. Those reductions can happen immediately or take two, three or five years.

Japanese ice cream, for instance, is currently taxed at 20 percent; that will be reduced to 10 percent in the fifth year, after reductions of 2 percentage points each year.

Various kinds of machine tools that are taxed between 4 and 5 percent now will have a 3 percentage point reduction on January 1 next year, and then will be duty free in January 2021.

All the details of the tariff reductions and the tariff lines affected are available in the text of the deal.

Japan will lower tariffs on hundreds of kinds of food, beverages and agricultural commodities, bringing the U.S. producers into the exact same schedule as the countries that stayed in the Trans Pacific Partnership. That means imports will have a tariff reduction on Jan. 1 and then another round on April 1. Of all the American goods that will enter Japan at lower tariffs, only six items are not made from food stuffs, and those are not products that require advanced manufacturing. Instead, they are industrial alcohols, glues and dyes. The details of the Japanese concessions are also available in the text.

During a press conference in Japan, Trade Minister Toshimitsu Motegi said Japan wants the deal to take effect “as soon as possible,” saying the timing is “of utmost importance,” according to an unofficial translation of the transcript. Motegi said no changes to the agreement were made after Japan’s legislature reviewed it.

During the signing ceremony, President Donald Trump called the deal a “game changer for our farmers and our ranchers" and was joined by U.S. Trade Representative Robert Lighthizer, Japan Ambassador to the U.S. Shinsuke Sugiyama and representatives from several trade groups, including the National Milk Producers Federation, the National Pork Producers Council and the U.S. Grains Council. “This is a strong and groundbreaking achievement for the United States and Japan,” Trump said. “Japan will not be charging us as they have for many, many years.”

Lighthizer called the agreement “a very big deal,” saying it will cover about $55 billion worth of trade. “We think we’ll have substantial additional sales as a result of this,” he said.

Sugiyama said the negotiations were “tense” and “fierce” but said Japan is happy with the deal. “We both had the same target,” he said. “To gain for both of us a beneficial outcome.”

The deal, originally announced at the United Nations General Assembly in New York last month, will open Japan’s market to more than $7 billion worth of U.S. agricultural exports (see 1909250052), reduce or eliminate U.S. tariffs on certain Japanese industrial goods (see 1909260014) and expand aspects of digital trade.