President Trump said Japan would open its markets to $7 billion of American agricultural goods, calling the trade deal a “huge victory for America’s farmers, ranchers, and growers.” The WSJ comments “the Japan deal may be the President’s biggest trade victory in his first term. But he made it much harder than it should have been.”
Understanding this trade deal is important.
- The US gets some access to Japan agricultural markets
- Japan gets what it already has (no increases in US tariffs on Japanese Cars).
Trump was excited to show he had given nothing but gotten something, simply by threatening Japan with new tariffs brought Japan to the table.
Not so fast…
The access that US gains to the Japanese agricultural markets is equivalent to what had been agreed upon by pacific nations in 2016 under the multilateral Trans-Pacific Partnership trade pact (TPP). At that time, Trump stated that “The Trans-Pacific Partnership is another disaster done and pushed by special interests who want to rape our country, just a continuing rape of our country”. One of Trump’s first acts in the office was to cancel TPP. All other countries eventually signed it.
Today the “new” US Japanese trade deal delivers for the US what it would have gotten already in 2016 under TPP and it delivers what all other TPP signatories already got years ago: better access to Japans agricultural market.
Here is another juicy detail: All trade deals be approved by Congress, but Trump kept the agreement to “and initial mini trade deal” suggesting that this is just the first part of a large trade deal, to avoid that Congress gets to approve it and to avoid that the WTO will examine its provisions.
As Bloomberg states: “All of this is doubly ironic because this week’s “mini deal” is a consequence of Trump’s decision to pull out of a far larger one — the Trans-Pacific Partnership, which included Japan and 10 other U.S. trading partners. It will also borrow heavily from the agricultural concessions the Obama administration spent years negotiating with Japan for the TPP… The end result: a partial deal that will leave out whole industries, undermine the global order and look a lot like parts of an agreement that Trump walked away from less than three years ago.“
