US, Japan Trade Deal to Help US Ag Exporters, Trump Says
The U.S. and Japan agreed to a trade deal that will see Japan buy more U.S. agricultural goods, including beef, pork, dairy and corn, the countries announced during the G-7 summit in France.
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President Donald Trump said during an Aug. 25 press conference the deal will make U.S. farmers “very happy” and that Japan will buy “hundreds of millions of dollars” worth of U.S. corn. “It involves agricultural and it involves e-commerce and many other things,” Trump said. “It’s a very big transaction.”
The two sides did not release specific details because they said they’re still completing the framework of the deal, which they hope to sign during the United Nations General Assembly at the end of September. Abe did not confirm the amount of corn Japan is planning to buy but said the country needs to buy U.S. agricultural goods because of Japan's problems with pests on some agricultural products.
“We believe that there is a need for us to implement emergency support measures for the Japanese private sector to have the early purchase of the American corn,” Abe said during the press conference.
The trade deal consists of three parts, U.S. Trade Representative Robert Lighthizer said: agriculture, industrial tariffs and digital trade. Lighthizer declined to give specifics but said the deal will open up Japanese markets to more than $7 billion worth of U.S. exports. The sectors that will benefit most include beef, pork, wheat, dairy products, wine and ethanol, Lighthizer said. “So it’s very good news for our farmers and ranchers,” he said.
During a press conference the next day, Trump called the deal “one of the biggest trade deals you’ll ever see” and expressed confidence the two sides can formally reach an agreement next month. “Yeah, he’s going to make the deal,” Trump said of Abe. “I feel pretty certain about that.”
Edward Alden, in an interview Aug. 26, said that while no one has seen any details, he expects U.S. auto parts tariffs will be lowered as part of the agreement.
"The Japanese clearly want trade peace with Trump, and I think they're willing to get a little bit less" than they would have in the Trans-Pacific Partnership in order to get that trade peace, said Alden, a trade expert who teaches at Western Washington University. Farmers have been losing out badly since the TPP came into effect, since competitors have better access to Japan's ag market now.
While this quick deal has been framed as an early harvest, and the first stage of a wider free trade deal, Alden doesn't think negotiations will continue in this administration with Japan. "I think they'll pocket it and move on to things" like the relationship with the European Union, he said.
That would disappoint the U.S. Chamber of Commerce. Myron Brilliant, vice president for international affairs at the Chamber, issued a statement that said: "Given the existing volatility and uncertainty in global markets, today’s news that the administration is making progress in talks with Japan, one of our most important trading partners, is a welcome step in the right direction. However, the U.S. Chamber strongly urges the Trump Administration to continue its efforts to reach a comprehensive, high-standard agreement that addresses the full range of U.S. trade priorities from services and intellectual property protection to regulatory barriers."
Phil Levy, chief economist at Flexport, a shipping advisory firm, said that if the U.S. has found areas to lower tariffs outside of autos -- Lighthizer said lowering auto and truck tariffs was not on the table -- the U.S. and Japan "may get a very minor package."
Trump, asked by a reporter in France if he would be willing to eliminate U.S. tariffs on imported autos from Japan, replied: “Why would I do that?”
Levy said the Trump administration needs results, "things that they can hold up and declare victory. They're not getting them on China, nobody seems that impressed on Korea."
Corn Refiners Association CEO John Bode, issued a statement that said: “News of a trade agreement with Japan is encouraging for all U.S. farmers, ranchers, and agri-businesses. The expansion of global export markets for not only refined corn products, but all U.S. agricultural products, is critical to America’s economic health going forward. We congratulate President Trump on this achievement and look forward to reviewing the specifics of the agreement as additional details become available.”