Trade

Trump’s Trade Deal With Japan Has Worse Terms Than TPP

JM Ashby
Written by JM Ashby

Japanese and American officials recently signed off on a trade agreement that did not include a guarantee that Trump won't impose tariffs on Japanese cars and car parts as Japan hoped for, but the deal as it's currently written also does not include ideal terms for Americans.

In fact, Trump's nascent deal includes worse terms than the Trans-Pacific Partnership (TPP) which Trump unilaterally withdrew from after taking office.

From Reuters:

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.

Trump regime negotiators reportedly wrote favorable terms for American beef, pork and wine into the deal, but those terms only match the language of the Trans Pacific Partnership. They don't surpass or fundamentally alter terms that were negotiated by the Obama administration.

Trump (and unfortunately some Democrats) said the Trans Pacific Partnership was a bad deal for Americans, but the truth is we'll be lucky to secure terms that anywhere near as good as what President Obama secured when the United States was leading the negotiations among a dozen countries.

Like Trump's fake replacement for the North American Free Trade Agreement (NAFTA), Trump's copy-and-pasted deal with Japan also won't become law until it's approved by Congress and that is unlikely to happen anytime soon.

I feel like I would be remiss not to point that the current terms of the Trans Pacific Partnership were also classified at the time they were being written and this led some Democrats like Senator Elizabeth Warren to declare that President Obama was negotiating a "secret deal" even though, as a senator, she had access to the terms.

Now that Trump is negotiating a "secret deal," I don't see anyone saying that. I'm not saying that, because I'm not disingenuous and I understand how these things work. The terms are classified because they're subject to change and releasing the (incomplete) terms could have significant implications (good and bad) for business and stocks.

I will personally vote for Warren if she is the Democratic nominee in 2020, but she is not my first choice in the Democratic primary for precisely this reason.

  • muselet

    Donald Trump withdrew the US from the TPP, declaring it a terrible, horrible, no good, very bad agreement; he then started trade wars with most of the developed world; then had his administration negotiate a bilateral deal with Japan; and now is button-bursting proud of an agreement that is less favorable than that horrid TPP. And as the crowning turd on this dungheap, Japan won’t change its agricultural import quotas to allow US producers to make up the ground they lost over the past two years.

    The Deal-Maker-in-Chief, ladies and gentlemen.

    I won’t be surprised if Trump cranks up his trade war with Japan, regardless of whether there’s a deal in place, because that sort of tactic is always helpful.

    –alopecia