The U.S. and Japan will enter negotiations for a “United States-Japan Trade Agreement” on goods and other key areas including services following the completion of “necessary domestic procedures,” according to a joint bilateral statement released Wednesday.
Trade Promotion Authority (TPA) legislation requires the president to provide at least 90 calendar days’ written notice to Congress of his intent to enter free trade agreement (FTA) negotiations. The notice must include the specific U.S. objectives for negotiations and the date on which the president intends to initiate those negotiations.
The executive branch also must consult before and after negotiations with the Senate Finance and House Ways and Means committees as well as provisional Senate and House trade advisory groups defined in TPA.
The joint statement indicates that the U.S. will seek market access outcomes in the automotive sector designed to “increase production and jobs” in U.S. automotive industries, and that for Japan, the outcomes of its previous FTAs in terms of agricultural, forestry and fishery products constitute the maximum level of concessions that Japan would give in an FTA negotiation with the United States.
One example of the Japanese agreeing to expand Japan’s market access for agricultural products can be found in the Trans-Pacific Partnership (TPP), which would have lowered Japanese tariffs on U.S. beef exports, for example, from 38.5 percent to 9 percent over 16 years.
The U.S. and Japan will “make efforts” for the “early solution of other tariff-related issues,” the joint statement says. Steel and aluminum from Japan have been subject to U.S. Section 232 global tariffs since March 23.
The announcement of the launch of U.S.-Japan FTA negotiations drew praise from the likes of Senate Finance Committee Chairman Orrin Hatch, R-Utah, House Ways and Means Committee Chairman Kevin Brady, R-Texas, and the U.S. Chamber of Commerce.
“Japan is one of the world’s largest economies and our fourth largest trading partner,” Hatch said in a statement. “A trade agreement with Japan has the potential to open more markets for U.S. goods and services, which will help American producers expand operations and lower prices at home.”
Agriculture Secretary Sonny Perdue said Japan is an important customer for U.S. agricultural products and that the “breakthrough” announcement comes with “great potential.”
U.S. Chamber of Commerce Vice President for Asia David Gossack said FTA discussions should help put U.S. businesses on a level playing field with foreign competitors and address “longstanding issues” between the U.S. and Japan.
“We will try to do this in two tranches,” U.S. Trade Representative Robert Lighthizer said during a press call on Wednesday, according to a readout of the call, “one sort of early harvest — the kinds of things that we can do in the next few months — and then longer-term problems.”
In negotiations, the U.S. hopes to tackle issues in the goods area, associated with tariffs and other “obstacles to trade,” in the next few months, Lighthizer added, noting that the U.S. and Japan don’t yet have a set timeline under which they’re looking to produce certain deliverables.
“I would remind you that, on things that require statutory changes, we’re going to have to go through the congressional process, wait 90 days and then start that part of it,” he said. “So there’ll at least be a few months before we can do the kinds of things that require statutory changes.”
Lighthizer said, “There has been some reluctance” associated with the start of bilateral trade agreement negotiations between the U.S. and Japan, noting Japan’s membership in the TPP. “The president is not going to join the TPP.”
President Donald Trump in remarks on Wednesday said that Japan was unwilling to enter bilateral FTA negotiations with the U.S. over the years “for various reasons,” but that he is “very happy about” the Japanese government’s decision to enter new talks.
“Actually, I think we will probably come to a conclusion,” Trump said. “I think it’ll be something very exciting. And Japan is very smart. Great negotiators. And, you know, up until now, they’ve done very well, and they’ll continue to do very well.”
Of the five countries in the TPP with which the U.S. doesn’t have an FTA, Japan is “by far” the biggest, with a $5 trillion economy, about 15 times bigger than the second biggest, Lighthizer said.
He added that he is talking to Congress Thursday about negotiations and the associated TPA process.
The U.S. and Japan are also part of a trilateral group with the EU aiming to reorient trade laws to effectively deal with China’s non-market economic practices, Lighthizer said during the call.
A trilateral statement was released Tuesday after trade ministers from the three governments met on the sidelines of the U.N. General Assembly meeting in New York.
The statement noted concerns associated with non-market policies and practices of “third countries” but did not specifically mention China.
A White House readout of a meeting between Trump and Japanese Prime Minister Shinzo Abe in New York on Wednesday stated that a U.S.-Japan FTA would have “enormous potential” to improve economic conditions in both countries and provide “significant, new market access for United States workers, farmers, ranchers and businesses.”