US deemed winner in trade pact, but Japan also gains

The United States has come out ahead in a trade agreement struck with Japan on Wednesday, but Japan gains by avoiding extra tariffs on automobiles and keeps its rice market protected, some experts said.

US President Donald Trump and Japanese Prime minister Shinzo Abe signed the trade-enhancement agreement during a meeting on the sidelines of the United Nations General Assembly in New York.

The deal will reduce agricultural tariffs in Japan and industrial ones in the US and set rules for digital trade. However, it leaves the treatment of vehicles, the biggest source of the $67.6 billion US trade deficit with Japan, for future talks.

The agreement - which will cut Japanese tariffs on US products such as beef, pork, wheat, cheese, almonds and wine and reduce US barriers to Japanese turbines, machines tools, bicycles and other goods - is due to take effect in January. Negotiations on a larger trade deal are scheduled to begin four months later.

"It's a tremendous trade deal," Trump said at a news conference.

Calling the pact a "huge victory for American farmers, ranchers and growers", Trump said that Japan would open its markets to $7 billion in US agricultural goods.

"The pact is largely in favor of the US because it gives a much-needed break to its farmers, whose exports have suffered a lot as a result of Trump's hard-edge trade policies," said Liu Qingbin, a professor at the Institute of Advanced Sciences at Yokohama National University.

Liu said the deal is "acceptable for Japan", as it avoided the proposed extra tariffs on automobiles and it has not to open its "most important rice market".

The text of the agreement contained no explicit assurances that Trump would not impose extra tariffs on Japanese auto imports, as he had threatened to do under Section 232 of the Trade Expansion Act. However, both Japan and the US confirmed such a move is "unlikely", with Tokyo stressing the US "will not"; on the US side, the phrasing is "for now".

"Between Trump and myself, that has been firmly confirmed - that no further tariffs will be imposed," Abe said, indicating he had obtained similar assurances for the future.

In response, Robert Lighthizer, Trump's top trade adviser, said tariffs on Japanese automobiles appeared unlikely "at this point". "At this point, it is certainly not our intention, the president's intention, to do anything on autos, on 232s, on Japan," he said, referring to the Section 232 provisions.

Masanari Koike, a former member of Japan's House of Representatives, believes the agreement showed that Japan has given ground in the face of US demands.

"The Japanese government and the media seem to be relieved, but the US states that this agreement is only the first step. However, it is also understandable that Japanese public reacted to the agreement with some relief, instead of disappointment, because the outcome could have been worse," Koike said.