Japan lower house passes US trade deal; auto tariffs still in question

Japan’s lower house of parliament approved on Tuesday a limited trade deal Prime Minister Shinzo Abe agreed with the united states, clearing the way for tariff cuts next year on items including U.S. farm goods and Japanese machine tools.

But there is uncertainty over how much progress Japan can make in negotiating the elimination of U.S. tariffs on its cars and car parts, casting doubt on Abe’s assurances the deal he signed with U.S. President Donald Trump was “win-win”.

Japan and the united states last month formally signed the limited trade deal to cut tariffs on U.S. farm goods, Japanese machine tools and other products while staving off the threat of higher U.S. car duties.

The government’s proposal to ratify the trade deal will next be brought to the upper house for a vote but its passage in the powerful lower house increases the chances it will come into force in January.

The deal will give Trump a success he can trumpet to voters but Abe has said it will bring as much benefit to japan as to the United States.

Japan has estimated the initial deal will boost its economy by about 0.8% over the next 10-20 years, when the benefits fully kick in. It also estimated 212.8 billion yen of overall tariffs on Japan’s exports to the United States will be reduced.

But the figures were based on the assumption the united states would eliminate its tariffs on Japanese autos and auto parts – a major sticking point.

Without those tariff cuts, the reduction in overall U.S. tariffs on Japanese goods would be a little over 10% of the government’s projection, according to an estimate by Japan’s Asahi newspaper and Mitsubishi UFJ research and consulting.

After the deal is ratified, japan and the United States have four months to consult on further talks, and Trump has said he wants more trade talks with japan after the initial deal.

But Japanese government sources familiar with the talks say the momentum to negotiate a deeper deal appears to have waned for now with Washington preoccupied with talks with Beijing.

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