Japan escapes auto tariffs, but Trump is not done with trade deal

Sep 27, 2019 | News On Japan

Sep 27, 2019 (Nikkei) - During a signing ceremony for the U.S.-Japan trade agreement on Wednesday, President Donald Trump invited in members of farming organizations to the room at the InterContinental New York Barclay to witness his accomplishment.

"This is a huge victory for Americaâ€™s farmers, ranchers, and growers," he said. "And thatâ€™s very important to me."

The U.S. agricultural sector has been reeling under the trade war with China, especially after Beijing stopped purchases of farm goods in August. Trump was hungry for a win. And Japanese Prime Minister Shinzo Abe knew it.

A looming presidential election and the trade war with China propelled Trump to reach a partial trade agreement within six short months since negotiations kicked into full gear.

Key to the deal was Japan agreeing to gradually lower the levy on U.S. beef to 9% from the current 38.5%, matching the goal rate under the Trans-Pacific Partnership trade that Washington left.

Just a month ago, the two countries were at loggerheads, with the U.S. pressing for greater market liberalization than Japan agreed to under the TPP.

Toshimitsu Motegi, then Japan's lead negotiator and now foreign minister, held his ground. "You're the ones who want a quick agreement. I'm only offering things I can deliver on," Motegi told U.S. Trade Representative Robert Lighthizer.

The situation shifted on the last day of talks on Aug. 23, when China announced additional tariffs on $75 billion of U.S. goods. After consulting with Trump, Lighthizer withdrew demands for a low-tariff quota for dairy and other products that exceeds the terms agreed on under the TPP. The two sides quickly worked out a broad agreement.

Abe and Trump met on the sidelines of the Group of Seven summit in France two days later. At a chat that followed, Trump said he was pleased with the results and wanted to sign the deal.

"Shinzo, do you mind if I talk about the corn purchase?" Trump asked Abe. The American leader was eager to announce the large scale purchase to reporters.

The Japanese leader had agreed to import U.S. corn separately from the trade deal. Many American corn farmers also grow soybeans, which have been hit hard by Chinese tariffs. Corn shipments to Japan could help alleviate their plight.

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