Japan US trade deal struck

On Wednesday, the US and Japan signed a preliminary trade deal to go into effect in January 2020. The deal is welcomed by farmers who have been dealt a harsh blow by the breakdown of negotiations with China, as Japan will decrease tariffs on US beef and pork. Negotiations for a future trade agreement will start four months after this one starts.

The agreement offers a respite from the threat of auto tariffs against Japan and locks in tariff-free digital trade between the nations. Farmers have long felt the pinch since China has stalled on buying US soybeans and pork products. However everyone involved understands that this deal isn’t comprehensive enough and will need further negotiations next year.

According to the USTR the following products will be primarily impacted:

  • Reduce tariffs on products such as fresh and frozen beef and pork.
  • Provide a country-specific quota for wheat and wheat products.
  • Reduce the mark-up on imported U.S. wheat and barley.
  • Immediately eliminate tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli, and more.
  • Provide staged tariff elimination for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste.

The digital trade portion contains the following:

  • Prohibitions on imposing customs duties on digital products transmitted electronically such as videos, music, e-books, software, and games.
  • Ensuring non-discriminatory treatment of digital products, including coverage of tax measures.
  • Ensuring barrier-free cross-border data transfers in all sectors.
  • Prohibiting data localization requirements, including for financial service suppliers.
  • Prohibiting arbitrary access to computer source code and algorithms.
  • Ensuring firms’ flexibility to use innovative encryption technology in their products.

We’re keeping an eye on these negotiations as they develop and will continue to bring you more information. If your cargo is impacted by this trade agreement, we encourage you to reach out to your Nelson representative to discuss how this can apply.