Japan’s Diet, their upper house of parliament, has approved the limited trade deal reached with the U.S. that will cut tariff levels on farm and industrial goods. The lower house of parliament cleared the plan last month. No U.S. congressional approval of the deal is required. This now paves the way for the deal to be implemented starting in January.
Agricultural provisions in the pact are the highlight for the U.S. side, while Japan insists that the U.S. has committed to remove tariffs it has in place on Japanese autos and auto parts, with the two sides to embark on negotiations on the time frame for such an action.
As for the economic impacts of the deal, Japan’s Cabinet Secretariat indicated it would boost real GDP by 0.8%, with that expectation based on the assumption that existing tariffs on Japanese car exports to the U.S. would be removed. Japan’s agricultural production was forecast to fall between 60 billion-110 billion yen ($552 million-$1 billion), according to the estimate.
For the U.S., the deal will result in tariffs being either lowered or removed on $7.2 billion in U.S. agricultural products like beef, pork, wine and cheese. The accord largely sets the tariff levels for U.S. market access in Japan at those that would have been put in place had the U.S. remained in the Trans-Pacific Partnership (TPP) agreement that has since been finalized between the 11 countries that were part of the TPP. That pact is now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
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