US-Japan ink phase one of trade deal on $7 billion in US goods

The first phase of a trade deal between the U.S. and Japan has come together after President Donald Trump met Japanese President Shinzo Abe at the United Nations on Wednesday.

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Trump said Japan will open new markets to approximately $7 billion in U.S. agriculture products, including beef, pork, wheat, cheese, corn, wine and more.

"Under the new agreement, I believe we've successfully covered a wide range of areas including agricultural products and digital trade. I'm convinced that now with these two agreements in place, we'll be able to develop both economies of Japan and the US as we move forward" said Prime Minister Shinzo Abe speaking from the U.N. Wednesday.

The two leaders signed the initial agreement sitting side-by-side.

Japan’s Foreign Minister Toshimitsu Motegi and US Trade Representative Robert Lighthizer met on the sidelines of the 74th UN General Assembly on Monday and, according to Japanese media, “fully agreed on all trade talks". Motegi told reporters the deal “will be satisfactory to Japan” and the text would be released Wednesday.

The two sides agreed US tariffs on Japanese automobiles would be rolled back sometime in the future with no further specification on the exact timing. In exchange for the removal of taxes on Japanese automobiles, Japan would in turn decrease tariffs against beef imported from the US from 38.5 percent to 9 percent.

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The WTO Most Favored Nation (MFN) treatment is still a mainstay of the multilateral trading system and requires WTO members to provide favorable trade terms and remove tariff barriers as part of any bilateral trade agreement with another member. The removal of auto tariffs on Japanese imports would bring the US into compliance with this WTO regulation.