US-Japan Trade Deal: A Positive Step for Trade

 

The new U.S.-Japan trade deal will boost opportunities for American agricultural exporters. It also establishes a strong precedent for digital trade. 

According to the Office of the U.S. Trade Representative (USTR), the new deal will give U.S. pork and beef producers the same access to Japan’s market that producers in other countries receive under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. In addition, more than 80 percent of U.S. dairy exports will receive preferential treatment. 

These changes will encourage increased U.S. exports to Japan. 

In addition, the United States and Japan signed a new Digital Trade Agreement that USTR described  as “the most comprehensive and high-standard trade agreement addressing digital trade barriers ever negotiated.” It is significant that the deal ensures non-discriminatory treatment of digital products, including coverage of tax measures. In recent years, digital sales taxes have emerged as a protectionist threat to the world trading system. As with the digital provisions of the U.S.-Mexico-Canada Agreement (USMCA), these digital trade rules do not require congressional approval. 

Although the deal is a step forward for U.S.-Japan trade, it could have been even better. Unlike most trade deals, the U.S.-Japan agreement does not include any cuts in import taxes that could have boosted U.S. manufacturing.  

For example, according to President Trump, “They’re building -- Japan -- many car plants in the United States. They’re building in Michigan, Ohio, lots of different states, and we just appreciate it very much.” Had the U.S. taken advantage of the U.S.-Japan Trade Agreement as an opportunity to eliminate our 2.5 percent tax on imports of auto parts from Japan, the result would have been even more investment in U.S. car plants. 

However, no deal is perfect, and Americans should welcome these new agreements that strengthen cutting-edge digital trade rules and create new export opportunities for U.S. farmers and ranchers