Taking a closer look

Where the U.s.-japan trade deal falls short of Trans-pacific pact

WASHINGTON — U.S. President Donald Trump has called his new trade deal with Japan a “phenomenal” victory for U.S. farmers.

But don’t expect America’s Land O’lakes butter to knock New Zealand’s Anchor or France’s President brands off store shelves in Japan, the world’s third largest economy.

Butter is one of several U.S. dairy products that will not get improved access to Japan’s 127 million consumers under the limited bilateral trade deal signed by Trump and Japanese Prime Minister Shinzo Abe on Sept. 25.

The deal’s full text has not been released and remains classified, but congressional aides, trade experts and industry groups briefed on it say that it offers worse access to Japan for some U.S. agricultural goods than the Trans-pacific Partnership (TPP), a now 11-country trade deal that Trump quit on his third day in office in 2017.

U.S. butter, milk powder and evaporated milk, along with some grains, would have competed with other TPP signatories for Japan’s new import quotas under the Pacific Rim deal.

When the United States pulled out, that left more space for brands like Anchor or Australia’s Western Star, and Japan refused to grant new quotas for U.s.-made products in the just-completed U.S. negotiations.

But there are gains that bring U.S. beef, pork and wine exports in line with TPP competitors from Australia, New Zealand and Canada, putting them on the same tariff schedule.

“There are some specific parts of the ag sector that really do benefit from this,” said Matthew Goodman, a Asian economics expert at the Center for Strategic and International Studies in Washington. “More broadly, this is not a highly significant deal from a commercial perspective, as it doesn’t touch the biggest item in bilateral trade, autos and auto parts.”

WHAT’S LEFT OUT

The U.s.-japan agriculture-centered deal is notable for what it leaves out. It does not include the bulk of products that make up the bilateral trading relationship, notably autos from Japan and aircraft, liquefied propane gas and semiconductor manufacturing equipment from the United States.

Motor vehicles and parts, by far the largest Japanese export to the United States at $56 billion in 2018, were left out for a later phase of negotiations. Abe said Trump agreed not to impose threatened “Section 232” tariffs on Japanese cars and parts on national security grounds.