Who is the deal winner? -Behind Japan-US trade negotiations-Oct. 11 19:34

"Significantly reduce the US trade deficit!"
President Trump appealed at the signing ceremony of the Japan-US trade agreement in Washington this month. I emphasized the outcomes with next year's presidential election in mind, but in reality, which of these “deals” has gained more fruit from Japan and the United States? The reporter in charge who covered a series of negotiations tells the backside that can be revealed because the negotiations are now over.
(Ministry of Economics, Hiroki Okaya, Yutaro Miyamoto)

American impatience

However, the conclusion of over five months after the start of the ministerial level talks in April was an exceptional speed conclusion for trade negotiations.

In late August, the attitude of the US, which strongly urged Japan to open up the agricultural market, changed. It was a ministerial talk held in Washington for 3 days.

Government officials involved in the negotiations look back.

“In the previous negotiations, the United States had only unilaterally requested Japan to open its agricultural market, and it was far from consensus.

“Descent” means to make a concession by negotiation. Negotiations that were in this state will begin to move from here.

Behind the softening of the American side, there is also the hardship that the United States itself invited ironically due to withdrawal from TPP. The so-called TPP11 without the United States came into effect at the end of last year, while tariffs on beef imported from Canada and New Zealand into Japan were reduced, while those produced in the United States remain unchanged. As a result, the share of Canadian products and other products has grown in the Japanese market.

For the American beef industry, the Japanese market is the “dollar box” with the largest export volume. For that reason, in order to avoid being left in an unfavorable situation, industry groups were increasing pressure on the US government to “become at the same level as TPP, so it should be concluded early”.

The weakened momentum on the American side led to the conclusion of a “TPP level” decision that Japan had in mind.

The situation that rice was protected

“Rice” emphasizes that the Japanese government has specifically protected the agricultural products that are in the process of being settled at the level of “TPP”.

At TPP, Japan has agreed to establish a maximum of 70,000 tons of tariff-free import quota for the United States per year, but this time it will not establish any tariff-free import quota for rice.

A senior Japanese government official said, “It does n’t give us room to increase rice production. This is a great victory.”

The domestic situation is related to the background that the United States, which should have been successful in opening the agricultural market, gave it to rice.

America's main rice-producing region, California, is the foundation of the Democratic Party.

Another negotiating party pointed out that “the Republican Trump administration was less interested in acquiring rice import quotas,” and the Trump administration didn't dare to demand the expansion of rice exports to Japan. There is.

Pelosi, the chairman of the Democratic Party and a major influence on parliamentary management, was elected by California, but the ground is the wine region. Regarding the wine, according to the request of the United States, Japan has responded to tariff reductions similar to TPP, and it seems that the political situation in the United States has had a subtle effect.

"Automobile" tactics

Along with agricultural products, “automobiles and auto parts” were the focus.

At TPP, the US side agreed that tariffs on passenger cars would be phased out over 25 years, and that parts would be eliminated immediately on nearly 90% of items. Originally, it should be the same as “TPP”, but the preconditions have changed significantly in this Japan-US negotiation.

The reasons for this were the addition of tariffs based on the “Trade Expansion Act Article 232” flickered by President Trump and export volume restrictions.

President Trump, who sees the US trade deficit as a problem, was willing to add a 25% tariff on imports of Japanese cars, up to about 10 times the current level.

In fact, the Japanese government coordinated with industry associations and maker executives under the surface of the water, and clearly decided priorities based on what to do.

The priority is
1. Do not allow the United States to trigger customs charges under Article 232 2. Do not include provisions that restrict exports to the United States

The volume limit is included in a new trade agreement agreed between the United States, Canada and Mexico, and it sets an upper limit on the number of cars exported. If the limit is exceeded, a 25% tariff will be added.

“If we can accept the quantity regulation even once, we will escalate the US request. It will never be accepted.”

A government official spoke.

Japan has had a bitter experience in accepting semiconductor export restrictions in the 1980s due to Japan-US trade friction, leading to the fall of the “Hinomaru Semiconductor”. By adopting these tactics, “tariff elimination”, which should normally be the goal, has been lowered in priority.

Reasons for “continuous consultation” for automobiles

As a result, it was confirmed that the customs tax-inclusive measures would not be invoked while the agreement between Japan and the United States was being implemented, and the customs tax-increase / quantity restrictions were avoided.
With regard to automobile tariffs, the term “tariff elimination through further negotiations” was expressed, and no specific deadline was set, and negotiations would continue in the future.

The reason why the American side took a strong stance until it flickered the car tariff. That is because the key to the vote of the Midwest, where the automobile industry is prosperous, will be key to the re-election of President Trump in next year's presidential election.

For President Trump, who won the midwest battle in the last presidential election, the car was a “sanctuary” that could never be concessioned in order to keep voters.

Lightheiser Trade Representative

After the conclusion of the negotiations, Lightheiser Trade Representative said that the agreement does not include cars, and appealed to the domestic market.
Then, the United States did not have to include “the tariff elimination by further negotiations”.

However, this expression was inevitable because of the consideration of international rules over trade agreements.

If tariff elimination in the automobile sector, which accounts for more than 30% of the export value from Japan to the United States, is not included, the percentage of tariff elimination on both sides will remain low, and there is a risk of violating the rules set by the WTO = World Trade Organization. . While avoiding WTO violations, what both sides were able to accept was the expression “tariff elimination through further negotiations”.

Negotiating officials struggled, saying, “It was a completely different environment from trade negotiations during peacetime, but we were able to secure what we could secure.”

No scratches on each other

As a result, Japan agreed to protect rice and rice in the United States, symbolic items that should be protected, and to eliminate or reduce the maximum possible tariffs at the moment.

Unlike TPP, which shares pain with each other in accordance with the principles of free trade, both Japan and the United States become “mini-deals” in order to prevent political damage in the country. In that sense, “WIN-WIN” It can be said as a result.

The agreement is expected to come into effect on January 1, next year, and within four months, discussions for further comprehensive agreement negotiations will be completed.
In addition to tariffs on automobiles and parts that have been postponed, it will also focus on how to deal with service trade such as insurance and finance that were not covered this time.

However, depending on President Trump's impeachment movement and the situation of the presidential election, the possibility that the United States will come back to a strong position cannot be denied, and the situation will continue to be unpredictable.

Economic Department reporter
Hiroki Okaya

In 2013, he joined the Ministry of Agriculture, Forestry and Fisheries after entering Kumamoto Bureau.

Economic Department reporter
Yutaro Miyamoto

Entered the 2010 Sapporo Bureau