The administration has been celebrating a new trade deal with Japan for some time, and Bloomberg is reporting this week that the deal will be formally announced this month, according to White House economic adviser Larry Kudlow.
President Donald Trump and Japanese Prime Minister Shinzo Abe are scheduled to hold a one-on-one meeting Sept. 25 during the UN General Assembly in New York, Kudlow said Tuesday.
“There just might be an announcement at the United Nations,” Kudlow told the U.S.-Japan Business Conference in Washington. “You can never tell, but I’m an optimist.”
On Monday, President Donald Trump said that his administration had struck a partial trade accord with Japan on tariff barriers and digital trade. He says a formal agreement is expected in the “coming weeks.”
The president, however, didn’t make clear whether he’d end the threat of slapping steep auto tariffs on Japan – a key reason that Tokyo wanted to negotiate with the U.S. from the outset of talks that began last year, Bloomberg says.
Japanese Foreign Minister Toshimitsu Motegi, the country’s point man for the talks, said on Tuesday that Tokyo wanted the Trump administration to end the threat of new auto tariffs before agreeing to a final trade deal. “We are aware of the internal process that is going on in the U.S. and the president’s notice of the U.S.-Japan trade negotiations,” Motegi told reporters in Tokyo.
The President announced the initial agreement in a notice to Congress, though he doesn’t require their approval to implement the deal.
U.S. Chamber of Commerce Chief Executive Officer Thomas Donohue, speaking at the same event as Kudlow, said business leaders are urging the administration to keep its focus on securing a “comprehensive high-standard trade agreement with Japan in the near future.”
“We need to make sure this initial package is a step in that direction,” said Donohue. “A comprehensive trade deal with Japan will provide some badly needed predictability – not only with the U.S. and Japan, but for our trade allies.”
On the prospects of a U.S.-China trade deal, Kudlow said the mood has turned more optimistic. “There’s a little music in the air, which is not always so but right now, we should enjoy the day,” Kudlow said.
U.S.-China trade deputies are meeting today and tomorrow in Washington and trade principals from the two countries will meet in mid-October to continue talks, Kudlow said.
However, in the midst of positive news about the expected deal, Bloomberg said that U.S. rice growers won’t get increased sales under the current terms of the expected deal.
While there are still details to be finalized, Bloomberg reported that there is not expected to be any expansion of Japan’s quotas for U.S.-grown rice. U.S. producers hope the issue will be dealt with in the second phase of negotiations between the two countries, Bloomberg said.
The report also cautioned that it is unclear whether or when Trump and Abe will continue talks given that any trade deal in Japan has to be approved by the parliament and the Trump administration is running out of time before the 2020 presidential election.
Japan is a key export market for U.S. rice farmers, who have been under pressure since the Asian nation signed agreements with other countries included in the revised 11-member Trans-Pacific Partnership that the administration ditched early in its tenure. U.S. Agriculture Secretary Sonny Perdue had suggested the White House may make a concession on rice, which is “sort of a cultural issue in Japan,” local media have reported.
“Although we are glad to see the bilateral agreement between the U.S. and Japan, we were disappointed to see that U.S. rice was not included,” Stuart Hoetger, a rice trader and manager of Pinnacle Rice Coop in Chico, California said.
Japan is required to import 682,000 tons of rice under a WTO commitment with the U.S. typically making up about half of that amount, according to USA Rice. Since Japan signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership there’s been more competition from Australian producers, the industry group said.
Chris Crutchfield, president of rice miller and marketer American Commodity Company LLC in Williams, California, said the U.S. industry wants not only more volume but better quality access to the Japanese market. Much of the U.S. rice going to Japan is auctioned by the government and used to make noodles, beer or sake, with only a small amount sold as table rice. American rice should be allowed to be auctioned directly to private buyers and marked as being grown in the U.S.
“We still believe the administration is going to get us something better than we currently have,” Crutchfield said.
So, we will see. The administration is looking to this agreement, along with similar ones with other important markets to damp down farmer resentments over the abandonment of the Trans Pacific deal. However, those pressures likely will depend heavily on how successful the next round of talks with China prove to be – negotiations producers certainly will watch closely as they take place, Washington Insider believes.
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