On Monday, the United States President Donald Trump has said that Washington had struck trade deals with Tokyo, which could be executed without congressional approval, but ceased short of assuring Japan that new tariffs wouldn’t impose on vital auto exports.
In a letter to the US Congress released by the White House, President Trump has said that he intended to enter into the deals on digital trade and tariff barriers “in the coming weeks” and notified lawmakers that the tariff agreement would be made under a trade law provision permitting the US President to make requited tariff reductions by order.
President Trump said in the letter, “In addition, I also will be entering into an Executive Agreement with Japan regarding digital trade.”
Neither deal would require a vote in Congress under the “fast track” approval process. In 2018, President Trump’s Administration has notified Congress that it would pursue negotiations with Tokyo under this process.
Over a critical issue to Japan, his announcement has left unclear whether he agreed not to impose threatened national security tariffs on auto and its related parts. Avoid “SEction 232” tariffs of up to 25 percent was a major motivational factor for Japan in negotiating with Washington on trade.
On Tuesday, Foreign Minister Toshimitsu Motegi told sources that “at the finishing stage, we plan to reconfirm that 232 won’t be imposed.”
Finance Minister Taro Aso has said that the deal won’t contain any provision on currencies – another worry for Tokyo. Japan wanted to avoid any deal impeding its ability to mediate in the foreign-exchange markets in the event of a rise in the Yen, or to expand the Bank of Japan’s huge monetary stimulus.
President Trump has said after the G7 Summit that he wasn’t considering auto tariffs “at this moment”.
Over the last few years, the scope of discussion has narrowed to exclude the automotive sector, the source of most of the $67 billion United States trade deficit with Tokyo.
Instead, Japanese Prime Minister Shinzo Abe and President Trump in August has announced an agreement in principle of agreement that covered reductions in tariffs on industrial and agricultural goods, but not on auto.
The US Trade Representative Robert Lighthizer couldn’t immediately be reached for comment on the letter and the trade agreements.
PM Abe and President Trump have said at the G7 Summit in France that they hoped to sign the deal at this month’s United Nations General Assembly in New York.
President Trump’s written letter didn’t disclose any content of the deals, but Japan had said that it is willing to consider a deal that would lessen agriculture tariffs to level previously examination under the Trans-Pacific Partnership, a trade deal that the US President has quit on his third day in office in 2017.
His letter reads that the US would pursue further trade negotiations with Japan.
“My Administration looks forward to continued collaboration with the Congress on further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan,” added President Trump.
The US-based technology industry officials have said that they expect the digital trade deal with Tokyo to be closely aligned with provisions in the US-Mexico-Canada Agreement (USMCA), which follows the US model for the development of internet.
The USMCA provisions objected to ensure the free flow of data across borders without any taxation, banned data server localization requirements and limit government’s potential to require the disclosure of source code by the companies they regulate.
For the US President, signing of even a partial trade agreement with Tokyo centered mainly on agriculture would offer some relief to the US farmers, who have been suffered by a 14-month US-China trade war and lost market share.