NEW YORK -- Prime Minister Shinzo Abe managed in the framework he agreed upon Wednesday with U.S. President Donald Trump to secure a commitment to refrain from imposing tariffs on imported Japanese automobiles, while also limiting the reduction of Japan's tariffs on U.S. agriculture, forestry and fisheries products to a certain level.
This represents a success ahead of the start of new trade talks, but tough negotiations appear to lie ahead.
"The negotiations will not be easy at all," economic revitalization minister Toshimitsu Motegi told journalists in New York on Wednesday after the Japan-U.S. talks. "But we want to move forward firmly with the talks, attacking where we should attack and defending where we should defend."
The focus of the upcoming trade talks will be the automobile sector. The Trump administration has shelved for the time being the imposition of tariffs on vehicles imported from Japan, which it has been considering on the supposed grounds of a threat to national security under Section 232 of the Trade Expansion Act, a U.S. law.
However, the joint statement released by Japan and the United States specifies, as the U.S. position, the aim of increasing U.S. automobile production and employment. Concrete measures to that end could include limits on the import of Japanese cars, or increasing manufacturing in the United States. The Japanese government has said it cannot accept export limitations, but the United States is likely to push very hard on this topic.
Regarding the trade pact to be newly sought by Japan and the United States, the Japanese government has said it wants a so-called trade agreement on goods, or TAG, which differs from a comprehensive free trade agreement, or FTA. This is prompted by strong opposition within Japan to an FTA with the United States, based on concern that larger-scale negotiations would be demanded.
The World Trade Organization, which encompasses nearly all the nations of the globe, including Japan and the United States, utilizes the "most-favored nation" principle, which forbids members from discriminating among their trading partners. If a nation lowers a tariff against one country, it must apply the lower tariff to all.
Tariffs can be lowered between specific nations under an FTA as an exception, as they promote freer trade, which the WTO works toward. Japan reached its first FTA with Singapore, an agreement that went into effect in 2002, and has continued to expand its area of free trade since then.
For an FTA to be accepted by the WTO, it is generally considered necessary to eliminate tariffs on at least 90 percent of the value of relevant trade. Nearly all kinds of goods, from industrial products to agricultural ones, are subject to TAG negotiations, so the ultimate agreement may reach the 90 pecent level and be close to an FTA in content.
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