U.S., Japan agree in principle on trade deal focused on farmers

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The U.S. and Japan agreed in principle on a trade deal under which Japan will slash tariffs on U.S. beef, pork and other agricultural products while continuing to face levies on its own auto exports. Announcing the deal Sunday, U.S. President Donald Trump also said Japan would purchase large quantities of U.S. wheat and corn.

Japanese officials may consider that a good deal if they can elicit a promise in return that its automakers will be shielded from Trump’s threat of more painful tariffs.

The U.S. president and Japanese Prime Minister Shinzo Abe announced the agreement Sunday in Biarritz, France, at the Group of Seven summit after a bilateral meeting earlier in the day.

“We’ve agreed in principle,” Trump said. “We’ve agreed to every point.” He also referred to a “massive” purchase of wheat and a “very, very large order of corn” that he said would happen quickly.

Abe said only that agricultural product purchases, which would be conducted by the private sector, were a possibility. Trump said there would be no change to U.S. tariffs on Japanese cars.

Spooked by Trump’s threats of punitive tariffs on Japanese auto exports, Abe agreed last September to start bilateral trade talks with the U.S. Trump has in turn come under pressure from U.S. beef and pork farmers, reeling from the trade war with China, who have also been hobbled by a tariff disadvantage in the Japanese market compared with competitors from signatories of the Trans-Pacific Partnership regional trade deal he rejected.

The countries have reached consensus on “core elements” and are setting a goal to sign a deal at the end of September during United Nations meetings, Abe said via a translator. He said there was still some work to be done by officials.

“If we are to see the entry into force of this trade agreement, I’m quite sure that there will be the immense positive impact on both the Japanese as well as American economies,” Abe said.

While the proposed deal may provide Trump with a fillip as he heads into his campaign for re-election, it remains to be seen how it will be received in Japan, where some officials have said the country should not give up its leverage over U.S. farmers without substantial concessions in return. Japanese trade agreements generally have to be approved by parliament before going into effect.

Japanese media reported earlier that the U.S. and Japan had agreed to an outline deal that would lower tariffs on U.S. beef to levels offered to members of the TPP. Japan and the U.S. agreed last year this would be the maximum possible level.

U.S. Trade Representative Robert Lighthizer also commented on the content of the proposed deal, which he said would open markets to $7 billion of products including ethanol, as well as beef, pork, dairy products and wine. He said U.S. tariffs on some Japanese industrial products would be reduced, but that these would not include cars.

The farming provisions of the deal won some early praise in the U.S., with the National Pork Producers Council and Senate Agriculture Committee Chairman Pat Roberts among those welcoming a deal they said would put U.S. agriculture on a level playing field with TPP-member nations.

Agriculture Secretary Sonny Perdue said removing the trade barriers will allow greater sales of U.S. farm products in Japan.

The deal is a “step in the right direction,” the U.S. Chamber of Commerce said, but Myron Brilliant, executive vice president and head of international affairs, urged the administration to seek “a comprehensive, high-standard agreement that addresses the full range of U.S. trade priorities from services and intellectual property protection to regulatory barriers.”

Trump had teased the deal throughout the day, saying he was “very close to a major deal with Japan” and that talks had been held over five months. “Frankly, I think what’s happening with China helps with respect to Japan. But it’s a very big deal. It will be one of the biggest deals we’ve ever made with Japan,” he said.

Abe and Trump also discussed North Korea, Kyodo News reported, and agreed to cooperate on the issues of the North’s nuclear weapons, missiles and abductions of Japanese citizens.

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