Japan’s lower parliament house accepted a beneficial trade agreement on Tuesday with the U.S, Prime Minister Shinzo Abe, paving the way for next year’s tariff cuts on products including U.S. farm goods and Japanese industrial machinery.
But there is confusion about just how much Japan can make this work in dealing the elimination of U.S. customs duties on its cars and car components, casting doubt on Abe’s promises about the contract he signed with the U.S. President Donald Trump has been a “win-win”
Last month, Japan and the United States officially agreed to sign a limited trade agreement to cut tariffs on U.S. agricultural commodities, Japanese industrial equipment and other items while staying away from the danger of higher U.S. car duties.
The government’s bill to ratify the trade agreement will be taken to the parliament for a ballot next, although its acceptance into the strong lower house increases its chances of coming into effect in January.
The bargain will provide Trump with an achievement that he can trumpet voters, but Abe said it could bring as much gain to Japan as it does to the United States.
Japan calculated that the initial agreement will boost its economic situation by approximately 0.8 percent within the next 10-20 years, once the perks kick in fully. It also projected that gross tariffs on Japan’s exports to the U.S. will be lowered by 212.8 billion yen.
But the statistics were based on the fact that their tariffs on Japanese cars and auto parts would be eliminated by the United States-a major sticking point.
Without those import duties cuts, the decrease in overall U.S. tariffs on Japanese products would be just over 10 percent of the state’s reflection, per an estimate from Japan’s Asahi and Mitsubishi UFJ Research and Consulting newspapers.
Japan and the United States have four months to agree on further negotiations after the agreement has been signed, and Trump has said that after the initial deal he intends further trade talks with Japan.
Yet Japanese government sources familiar with the negotiations suggest the impetus to strike a broader agreement seems to have diminished with Washington concerned about ties with Beijing for now.
“It’s unclear if Washington is sincere about pursuing trade talks,” said one of the sources.
“The question is just how much resources the U.S. will devote to Japan talks, even if we sign the deal. Before the presidential elections, there is limited time to conclude talks.