After the United States The trade agreement will enter into force and the two countries will determine the scope of the new trade negotiations within four months. The launch time and pace of the new negotiations will be greatly influenced by how the U.S.-China trade disputes and the U.S.-EU (EU) trade negotiations will proceed in the future. As two of the world`s most digitally advanced countries, the United States and Japan have a deep common interest in creating enforceable rules that help digital providers in all sectors of their economies innovate and create wealth and set standards for other economies that can emulate it. Testimony of Josh Nassar, House Ways and Means Subcommittee on Trade, U.S.-Japan Trade Agreements hearing, 116th Cong., 2nd ses., November 20, 2019, at waysandmeans.house.gov/legislation/hearings/us-japan-trade-agreements. The USJTA will reduce or eliminate tariffs on agriculture and certain industrial products and cover approximately $14.4 billion ($7.2 billion of U.S. exports and imports) or 5% of bilateral trade. The United States should reduce or eliminate tariffs on a small number (241) of industrial products, while Japan should reduce or eliminate tariffs at some 600 agricultural tariff lines and extend preferential tariff quotas for a limited number of U.S. products. In particular, the United States has characterized digital trade obligations as a “gold standard,” with non-discriminatory processing obligations for digital products and a ban on restrictions on data relocation and restrictions on cross-border data flows.

The first-phase agreement excludes most other products from tariff liberalization and does not cover access to the services market, regulation beyond digital trade or non-tariff barriers. In particular, the agreement does not apply to trade in motor vehicles, an industry that accounts for one-third of U.S. imports from Japan. Japan`s decision to participate in bilateral talks came after President Donald Trump threatened to impose additional tariffs on cars on Japan on the basis of domestic security concerns. In particular, Section 103, Point a), generally authorizes the President to enter into an agreement on customs barriers with a foreign country when “existing tariffs or other import restrictions … “Overloading and limiting U.S. foreign trade.” Section 103, point a), requires fewer notification and consultation requirements for tariff agreements. The main obligations of the U.S.-Japan digital trade agreement are highlighted below, with some comparisons with the most recent U.S.