The White House announced Sept. 25 two new agreements on trade with Japan that it expects will reduce the U.S. trade deficit with that country. The Office of the U.S. Trade Representative said the two sides plan further negotiations in the coming months in the interest of achieving a more comprehensive agreement that “addresses remaining tariff and non-tariff barriers and achieves fairer, more balanced trade.”

Tariff Reductions

Under a market access agreement, Japan will eliminate or significantly lower tariffs on $7.2 billion worth of U.S. agricultural products. For other agricultural goods, Japan will provide preferential U.S.-specific quotas. USTR states that once this agreement is implemented more than 90 percent of U.S. food and agricultural products imported into Japan will either be duty-free or receive preferential tariff access, giving U.S. farmers and ranchers “the same advantage as CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] countries selling into the Japanese market.”

Among other things, Japan has agreed to the following.

- country-specific quotas for wheat, wheat products, malt, glucose, fructose, corn starch, and potato starch

- reduced mark-up on U.S. wheat and barley

- immediate elimination of tariffs on almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli, prunes, and food supplements

- staged tariff elimination for products such as cheeses, processed pork, frozen poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste

- staged tariff reductions for fresh and frozen beef and pork

- limited use of safeguards against surges in imports of beef, pork, whey, oranges, and race horses that will be phased out over time

Separately, the U.S. will eliminate or reduce tariffs on (a) agricultural imports from Japan in 42 tariff lines valued at $40 million in 2018, including perennial plants, cut flowers, persimmons, green tea, chewing gum, and soy sauce, and (b) certain industrial goods from Japan such as machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments. The U.S. has also agreed to modify its global tariff-rate quota for beef, enabling Japanese producers to compete for a larger share of the global TRQ quantity.

Digital Trade

USTR states that a separate agreement includes a high-standard and comprehensive set of provisions on digital trade, including the following.

- prohibitions on imposing customs duties on digital products transmitted electronically such as videos, music, e-books, software, and games

- ensuring non-discriminatory treatment of digital products, including coverage of tax measures

- ensuring barrier-free cross-border data transfers in all sectors

- prohibiting data localization requirements, including for financial service suppliers

- prohibiting arbitrary access to computer source code and algorithms

- ensuring firms’ flexibility to use innovative encryption technology in their products

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