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Why U.S.-Japan trade talks have come quick agreement

The Yomiuri Shimbun

Prime Minister Shinzo Abe and U.S. President Donald Trump prepare for a joint press conference on Sunday afternoon in Biarritz, France.

By Takanori Yamamoto and Tomoko Tsuda / Yomiuri Shimbun Staff WritersBIARRITZ, France — The Japanese and U.S. governments have agreed to aim for signing a new trade agreement in September. The bilateral agreement in principle was realized over a mere five months of negotiations since April, in the context of compromises between Tokyo and Washington in accord with U.S. President Donald Trump’s desire to get some early results before the presidential election in November 2020.

“It’s a very big transaction, and we’ve agreed in principle. It’s billions and billions of dollars. Tremendous for the farmers,” Trump said at a joint press conference with Prime Minister Shinzo Abe during the Group of Seven summit on Sunday.

The United States has consistently called for an early conclusion of the trade agreement. For Trump, who aims to be reelected, securing support from domestic farmers is an urgent task. As the Trans-Pacific Partnership and the Japan-EU economic partnership agreement have entered into force, U.S. agricultural products have struggled in the Japanese market. The prolonged trade friction between the United States and China has also hit soybean farmers and others in the United States.

During the press conference, Trump did not forget to emphasize that, apart from the trade agreement, he had encouraged Japan to buy corn.

The Trump-Abe joint press conference was abruptly called on Sunday afternoon, resulting in many reporters accompanying Abe to fail to cover the event.

“The press conference was decided at the request of the U.S. side and there was no time to inform the Japanese reporters,” said a Japanese government source.

Trying to save face

It was in September last year when the Japanese and U.S. governments decided to start negotiations for the conclusion of a new trade agreement. Since the start of ministerial-level talks in April, when the negotiations got into full swing, the United States has taken a strong stance by demanding that Japan should yield unilaterally.

While calling on Japan to open its markets for agricultural products such as beef and pork, Washington rejected Tokyo’s request to abolish a 2.5 percent automobile tariff. Japan responded that those who are in a rush should yield.

Before withdrawing from the TPP, the United States had agreed to eliminate its 2.5 percent tariff on Japanese automobiles over the next 25 years. Even after repeated talks, the two sides failed to narrow the gap, causing impatience to brew on both sides.

To break the impasse, Japan responded to the demand of the U.S., most interested in the agricultural sector, while Tokyo shifted its focus from the demand on automobiles to industrial machinery and other industrial products as a whole. Japan’s strategy was to strike a balance to “save the faces of both Japan and the United States,” a Japanese government source said, allowing Trump to tell Americans that he made Japan open its agricultural market while protecting the U.S. auto market.

Compromises were made in agriculture in such ways that Washington’s demand to set an import quota for U.S. butter and other products was put off due to opposition from the Japanese side. Japan is believed to have received an understanding from the United States for setting its limit of compromise to levels that are set under past economic partnership agreements, including the TPP.

Toshimitsu Motegi, minister for economic revitalization, apparently told Abe after the ministerial-level talks with the United States that they were almost across the finish line.

A Japan-U.S. trade deal usually takes effect after the Diet and U.S. Congress both approve it. If the latest agreement is signed in September, the Japanese government may be able to submit a bill to an extraordinary Diet session to be convened in October at the earliest. Generally speaking, however, it takes about three months for a draft agreement to be drawn up after signing. Given the need to secure sufficient time for deliberations in the Diet, the issue is expected to remain on a tightrope.Speech

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