Discussion Board

On October 7, 2019 the US signed two limited trade deals with Japan which slashed tariffs on American agricultural exports worth $7.2 billion. They did not however, address President Trump’s threatened auto tariffs. The two deals scrap Japanese tariffs on certain agricultural products amounting to $4.3 billion and meat products worth $2.9 billion while tariffs would remain on the other roughly $1.7 billion of agricultural products. As part of this deal, digital products such as digital media and software will face reduced trade barrier and tariffs which already amounts to $40 billion. In comparison to the comprehensive free trade agreement the liberalization is much less as services, procurement etc. are not covered in the deal. As per the agreement, Japan is lowering tariffs in some agricultural sectors; however, this is still less than what it would have done under the Trans-Pacific Partnership. US on the other hand is lowering tariffs on a few industrial products. So, the question arises how can such a deal be consistent with the WTO rules which allows bilateral agreements only if they cover “substantially all trade”? Would this then qualify as an interim agreement under GATT which states “any interim agreement shall include a plan and schedule for the formation of such a customs union or of such a free-trade area within a reasonable length of time”? The US have implied that further negotiations with Japan at a later stage would take place to address all the other tariff and non-tariff barriers. It is to be seen if other countries who would be affected by this new development will enforce WTO rules against both countries in question. Additionally, the terms of dispute settlement are almost absent without a full set of litigations, implementation, and compliance provisions. Only time will tell if these new legal obligations are enforceable or if these commitments are too narrow for the need of a full dispute settlement guideline.

 

References:

Lester, S. (2019, October 8). The New U.S.-Japan Trade Deal. Cato Institute. Retrieved October 29, 2019 from https://www.cato.org/blog/new-us-japan-trade-deal

Elis, N. (2019, October 7). US, Japan sign trade deals. The Hill. Retrieved October 30, 2019 from https://thehill.com/homenews/news/464732-us-japan-sign-trade-deals

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