Business

Japan looks to put speculation to rest, says it has reached final agreement on trade deal with U.S.

by Satoshi Sugiyama and Reiji Yoshida

Staff Writers

Deal or no deal? That was the question driving news cycles over the past few days regarding a Japan-U.S. trade agreement.

Foreign Minister Toshimitsu Motegi put an end to the conflicting media speculation Tuesday, declaring that all negotiations are over after an hourlong meeting with U.S. Trade Representative Robert Lighthizer in New York.

According to local media reports, Tokyo and Washington have “reached a final agreement” on the trade deal, although the written pact still needs to be finalized as drafting work and legal checks by Japan’s Cabinet Legislation Bureau remain ongoing.

“I don’t think we are behind that much from our goal to sign the agreement at the end of September,” Motegi said.

“All the trade negotiations were finished today. I think we’ll have a great ceremony at the Japan-U.S. summit meeting (Wednesday),” Motegi told reporters in New York.

Prime Minister Shinzo Abe and President Donald Trump, both in New York to attend the U.N. General Assembly this week, are expected to issue a joint statement to confirm that a trade agreement has effectively been reached.

Multiple Japanese media outlets reported that Japanese officials would be unable to complete a full legal review of the agreement by Wednesday because the United States reportedly kept changing the deal’s wording.

U.S. media followed suit, reporting Tuesday morning that uncertainty over auto tariffs had stymied the two sides, thus causing a delay in signing the agreement.

Then Motegi’s comments dropped. They effectively signified the end of dizzying rounds of bilateral talks that have taken about a year, starting from when both sides came to the negotiating table until hammering out an initial agreement — an unusually expedited time frame for a major trade deal.

Japan and the U.S. agreed on the outline of the trade deal when Abe and Trump met on the sidelines of the Group of Seven summit in France in August.

Although the specifics have not yet been revealed, Japan will reportedly slash tariffs on beef imported from the U.S. from 38.5 percent to eventually 9 percent. Tariffs on U.S. pork import would be reduced as well, meeting Trump’s key demand.

U.S. farmers are increasingly feeling the blow from an intensifying trade war with China, driven by Trump’s hawkish policies. He regards them as an important voting bloc in his 2020 re-election bid.

He argues that they are also unable to compete fairly in the Japanese market with farmers from Comprehensive and Progressive Trans-Pacific Partnership signatory countries. Trump pulled the U.S. out of the precursor to that pact, the TPP, soon after becoming president in 2017.

In exchange, the U.S. is poised to cut tariffs on imported industrial goods from Japan.

The biggest sticking point for Tokyo, though, has been Trump’s threat to impose additional 25 percent tariffs on auto parts and automobiles imported from Japan on national security grounds. It would be considered a major defeat for the country if Japan failed to secure a commitment on that point.

Motegi declined to go into specifics on auto tariffs but said they would be announced Wednesday and were “not something you’d worry about.”

Kyodo News reported Tuesday that the joint statement will likely state that a quota on auto imports will not be implemented, which will elicit a sigh of relief from Tokyo if true.

The New York Times reported that Japan is demanding what’s known as “a sunset clause” to be included in the pact, meaning the trade deal and benefits associated with it would be nullified if the U.S. carries out the levies on imported Japanese cars.

Japanese officials have said that drafting a trade agreement requires massive amounts of paperwork, in which both countries need to strictly clarify the meaning of each term in hundreds of pages — often revealing gaps in the interpretations of either side.

In addition, the Cabinet Legislation Bureau needs to separately check the consistency in use of legal terms against those in other international pacts before the government submits the draft to the Diet for ratification.

“Devils are in the details. You often find differences in interpretations only after drafting a document,” a senior Foreign Ministry official said earlier this month.

“It’s a document to be submitted to the Diet. Even a single mistake cannot be overlooked,” the official said, adding that the Foreign Ministry has been pressed to submit the draft pact to the Diet during extraordinary session scheduled to begin Oct. 4.

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