Tokyo seeks to allay concerns over US-Japan trade pact

Japanese vehicles for export at a port in Yokohama, near Tokyo, earlier this year. Japanese Prime Minister Shinzo Abe and US President Donald Trump agreed to a deal on Sunday that will see Tokyo reduce levies on US agricultural produce. But Tokyo did
Japanese vehicles for export at a port in Yokohama, near Tokyo, earlier this year. Japanese Prime Minister Shinzo Abe and US President Donald Trump agreed to a deal on Sunday that will see Tokyo reduce levies on US agricultural produce. But Tokyo did not get any concessions from Washington on its tariffs on Japanese vehicles.PHOTO: ASSOCIATED PRESS
Under the proposed deal, Japan will buy excess US corn, which will supplement domestic corn crop damaged by pests.
Under the proposed deal, Japan will buy excess US corn, which will supplement domestic corn crop damaged by pests.PHOTO: REUTERS

Japan seen as getting raw deal as it fails to secure concessions on vehicle tariffs from US

Japan did not give in too much in its trade talks with the United States, its top government spokesman said yesterday as he sought to cool rising 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 tariffs on Japanese vehicles.

Still, Chief Cabinet Secretary Yoshihide Suga told a routine news conference that it was "extremely meaningful" that the two leaders had reached 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 under way, 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 would pave the way for the pact to take effect as soon as December after domestic procedures, an outcome that 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) of US products, US Trade Representative Robert Lighthizer said, with Mr Trump hailing it as "great for our farmers, ranchers and more". Mr Abe championed its "immense positive impact on both Japanese as well as American economies".

Mr Trump also said Japan will buy excess US corn, and accused 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 tonnes 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 lower tariffs progressively on US agricultural produce such as beef and pork to levels agreed in the Trans-Pacific Partnership (TPP) deal that Mr Trump jettisoned.

For instance, the 38.5 per cent import levy on US beef will be reduced to 9 per cent gradually.

This places US farmers on a competitive playing field with those from countries such as Canada, New Zealand and France. These countries are either part of the revised TPP, or another mega-trade deal with the European Union.

Still, these have been politically hard-won deals by Mr Abe, as rural Japanese agricultural cooperatives are worried that an influx of cheap foreign goods will erode demand for domestic produce. Kyodo News yesterday reported an unnamed farmer in south-western Kagoshima prefecture calling for more safeguards against a potential surge in US farm imports.

Meanwhile, Tokyo did not manage to secure 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 US reassurances that it will not set import quotas, or jack up auto tariffs on Japanese cars on national security grounds, as Mr Trump had threatened to do under Section 232 of the Trade Expansion Act.

The Nikkei reported that the US, however, agreed to remove tariffs on 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."

He added: "It is a pity the US did not respond to the elimination of passenger car tariffs, but Japan likewise has not committed to liberalising dairy products and rice."

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."

A version of this article appeared in the print edition of The Straits Times on August 27, 2019, with the headline 'Tokyo seeks to allay concerns over US-Japan trade pact'. Print Edition | Subscribe