Japan and the United States signed a trade agreement last night (September 25). From initial reports it appears that it is not a full agreement as it focuses on specific areas such as agriculture and digital products. Much press comment has focussed on the failure to eliminate tariffs on car exports, although there appears to be significant progress in this area.
Details of the agreement seem not to be available as yet, so it is difficult to be certain about its real impact. However, the two governments have released fact sheets that highlight the main areas of attention for the protocol, namely agriculture and some digital products. The White House cites the following agreements:
In addition tariffs will be eliminated on “machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments”.
The White House fact sheet also states that the accompanying digital agreement will focus on the following areas:
The “digital trade agreement” is probably the most important aspect of the meeting, although the direct impact of greater imports of foodstuffs into Japan on the shipping market cannot be discounted. As Shinzo Abe pointed out the “first- and third-largest economies coming to the table and announcing this new agreement means that we will have…. a positive impact on the global economy as a whole” and this certainly applies to demand in the logistics sector.
Essentially this agreement moves towards replicating much of the Trans-Pacific Partnership agreement that Donald Trump refused to sign several years ago. Although it certainly does not eradicate many of the real issues around the viability of global trade that still exists, it does establish an important element in a new, freer trading environment that ought to counter some of the pessimism that is currently fashionable.
Source: Transport Intelligence, September 26, 2019
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)