Japan did not give in too much for trade deal with US, Tokyo says, amid concerns of unfairness

In the broad agreement struck by US President Donald Trump and Japanese Prime Minister Shinzo Abe on Aug 25, Tokyo will gradually reduce levies on American agricultural produce but won no concessions from Washington on its auto tariffs on Japanese ve
In the broad agreement struck by US President Donald Trump and Japanese Prime Minister Shinzo Abe on Aug 25, Tokyo will gradually reduce levies on American agricultural produce but won no concessions from Washington on its auto tariffs on Japanese vehicles.PHOTO: AP

TOKYO - Japan did not give in too much in its trade talks with the United States, its top government spokesman said on Monday (Aug 26) as he sought to cool growing concerns that Tokyo got the short end of the stick.

In the broad agreement struck by US President Donald Trump and Japanese Prime Minister Shinzo Abe on Sunday, Tokyo will gradually reduce levies on American agricultural produce but won no concessions from Washington on its auto tariffs on Japanese vehicles.

Still, Chief Cabinet Secretary Yoshihide Suga told a regular news conference on Monday that it was "extremely meaningful" that the two leaders managed to reach a broad agreement.

He, however, dithered when asked if the US had dropped its threat to impose more tariffs on Japanese cars.

"Negotiations are still underway so I'd like to refrain from commenting," he said. "But I believe that won't be the case."

The two leaders said they hope to sign the deal, which covers agriculture, industrial tariffs and e-commerce, in New York next month.

This paves the way for the pact to take effect as soon as December after domestic procedures, which will give Mr Trump a fillip as he seeks re-election next year, even as the US-China trade war shows no signs of abating.

The proposed deal will open markets for US$7 billion (S$9.7 billion) American products, US Trade Representative Robert Lighthizer said, with Mr Trump hailing it as "great for our farmers, ranchers and more". Mr Abe, on his part, championed the "immense positive impact on both Japanese as well as American economies".

Mr Trump also said Japan will buy up excess US corn, accusing China of reneging on its promise. Mr Abe said this will supplement domestic corn crop damaged by pests.

 
 

Japanese companies are set to buy another 2.5 million tons of corn for animal feed, or about 25 per cent of what Japan typically imports from the US each year, public broadcaster NHK said.

Working-level talks will continue to iron out the text for the intended deal, under which Tokyo will progressively lower tariffs on US agricultural produce such as beef and pork to levels agreed in the Trans-Pacific Partnership (TPP) deal, which Mr Trump jettisoned. For instance, the 38.5 per cent import levy on US beef will be reduced gradually to 9 per cent.

This places American farmers on a competitive playing field with those from countries such as Canada, New Zealand and France, from which Japan has been buying more pork, beef and wine at the expense of the US. These countries are either part of the revised TPP, or another mega-trade deal with the European Union.

Still, these were politically hard-won deals for Mr Abe, as rural Japanese agricultural cooperatives are worried that an influx of cheap foreign goods will eat away at demand for domestic produce. Kyodo News on Monday cited an unnamed farmer in southwestern Kagoshima prefecture calling for more safeguards against a potential surge in US farm imports.

Meanwhile, Japan did not win any removal of US import taxes on Japanese vehicles, now at 2.4 per cent on large motorcycles, 2.5 per cent on cars, and 25 per cent on trucks.

It also did not win any reassurances the US will not set any import quotas, or jack up auto tariffs on Japanese cars on national security grounds, as Mr Trump had earlier threatened to do under Section 232 of the Trade Expansion Act.

The Nikkei reported that Washington agreed, however, to remove tariffs on about 400 car parts, and will abolish tariffs on other manufactured goods.

Mizuho Research Institute senior economist Junichi Sugawara told The Straits Times: "It is not clear what Japan managed to gain in return even though it agreed to what the US wanted most, which is to liberalise trade of beef and pork to TPP levels."

Noting the lack of assurances on Article 232, he added: "It is a pity that the US did not respond to the elimination of passenger car tariffs, but Japan likewise has not committed to liberalising dairy products and rice."

It remains unclear how these items will be treated in future, he said. "The US sees the agreement as a form of 'early harvest', and can be expected to seek further talks in future."

Mr Ichiro Fujisaki, the former Japanese ambassador to the US, told Bloomberg: "If you say 'win-win,' it's a capital letter 'Win' for the US and a small-letter 'win' for Japan."

He added: "In Japan's case, a small win plus non-negative assurance that no unilateral measures will be taken by the US, like on limiting car importations or some relations with security issues."