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ECONOMY > Trade

Early settlement was concluded because of election-related interests for both Japan and U.S.

On Sept. 25, Prime Minister Shinzo Abe and U.S. President Donald Trump reached an agreement on trade negotiations concerning tariffs and other matters between Japan and the U.S. in only a year or so after negotiations started. By calculating the possible impact of negotiations on their respective domestic elections, both the leaders reached an agreement at the best time for favorable results. 

 

During a signing ceremony of the joint statement on the agreement, President Trump stressed, “This is a huge victory for America’s farmers, ranchers and growers.”  

 

His joy reflects the president’s sense of crisis over next year’s U.S. presidential election. American farmers mostly in Middle West states that play a decisive role in a presidential election are unhappy with the Trump administration because they have suffered damage on account of the U.S.-China trade friction and the effectuation of the Trans-Pacific Partnership (TPP) agreement without the U.S.

 

Under the circumstances, President Trump invited representatives of U.S. agricultural organizations to the venue of the signing ceremony. During the ceremony, the president proudly explained, “Japan will open up its market to the export of American farm products worth 7 billion dollars.”

 

Based on the latest agreement, the nontariff quota on American rice exports to Japan will be eliminated. However, the elimination will not significantly impact President Trump’s next election because American rice exported to Japan is mostly produced in the state of California, a support base of the Democratic Party.

 

During the signing ceremony, President Trump did not forget to remind Prime Minister Abe that he owes the president. Bearing in mind the Upper House election held in July, the president said, “The prime minister successfully won an election not too long ago because of his friendship with me.”

 

“Friendship” means that the two leaders agreed to postpone the conclusion of trade negotiations until after the House of Councillors election; thereby, the impact of trade negotiations on the election was avoided. Immediately before the Japan-U.S. summit held in May, President Trump posted a tweet, saying, “Much will wait until after their July elections where I anticipate big numbers.”

 

On the other hand, the latest agreement was also made at the best timing for Prime Minister Abe. It was expected that the elimination and reduction of tariffs on U.S. agricultural products would impact Japanese farmers, a strong support base for the Liberal Democratic Party; hence the LDP wanted to avoid making a deal with the U.S. on the elimination before the Upper House election. Now that election is over, and there will be no national election for a while. Lower House members have two more years to serve.

 

The two countries agreed to maintain the auto tariff on Japanese cars in the trade pact, which was set to be eliminated in the TPP before the U.S. withdrawal. Japan apparently gave up more than the TPP standards. Unless Prime Minister Abe decides to dissolve the Lower House, it will be a while before Japanese voters have a chance to render judgement on the latest trade agreement. 

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