WASHINGTON (Pakistan Point News / Sputnik - 01st January, 2020) The newly inked trade agreement between the United States and Japan comes into effect with the start of the new year, reinstating preferential terms for American agricultural exports and offering easier market access for certain Japanese industrial goods and liberalizing digital commerce.
The deal, reached last September, replaces the Trans-Pacific Partnership abandoned by US President Donald Trump in 2017 and replaced with a series of bilateral accords. Left out of the TPP framework, American farmers did not benefit from the same exemptions as those countries that supported and signed it, including Australia, Canada, Mexico and New Zealand.
According to the White House, once the new agreement is implemented, over 90 percent of US food and agricultural products imported into Japan and valued at around $7 billion will either be duty free or receive preferential tariff access, giving American farmers and ranchers the same advantage that their TPP competitors countries enjoy.
The US will reciprocate with tariff elimination or reduction on certain agricultural and industrial goods from Japan, the latter of which include machine tools, steam turbines, bicycles and musical instruments.
The deal, however, leaves 2.5-percent tariffs on cars and auto parts - notably the largest part of Japan's exports to the US - in place until further negotiations. Auto tariffs have been the main bone of contention: Japan seeks to remove them as was agreed by the previous US administration within the framework of the TPP, while Washington has threatened to slap additional tariffs on car imports on national security grounds pursuant to the Section 232 of the Trade Expansion Act of 1962.
On January 1, both countries also start implementing a stand-alone agreement regulating $40 billion worth of digital trade. The deal includes prohibitions on imposing customs duties on products transmitted electronically such as videos, music, e-books, software and games.
Last year, the US also negotiated major new deals with China, Canada and Mexico, with the White House expecting improved trade conditions to boost gross domestic product by at least half a percentage point in 2020.
