U.s.-Japan Trade Agreement And U.s.-Japan Digital Trade Agreement

kenty9x | December 19, 2020 | 0

The Digital Trade Agreement is a separate agreement that sets rules in the digital space.15 The content of the Digital Trade Agreement is virtually the same as the provisions of the U.S.-Mexico-Canada agreement (USMCA). Notable provisions include a ban on tariffs on electronically transmitted content (e.g. B software and music) and the recognition of an electronic signature as a legally appropriate authentication tool. This is important as the World Trade Organization (WTO) electronic transfer moratorium is to be renewed at the 12th Ministerial Conference in June 2020 (see the next issue of EY tradewatch for a corresponding article). 10. U.S.-Japan Trade Agreement, Appendix I: Japan`s Tariffs and Customs Provisions, I-B-5-1; ustr.gov/sites/default/files/files/agreements/japan/Annex_I_Tariffs_and_Tariff-Related_Provisions_of_Japan.pdf. Together, these rules will put in place predictable rules and foster a strong digital trade market between the two countries – developments that should support more prosperity and well-paying jobs in the United States and Japan. Finally, the USJTA could have a wider impact on the trading system – some argue that it is incompatible with WTO rules. Such an argument is that it does not meet the requirement of Article XXIV, paragraph 8, point b), of the General Agreement on Tariffs and Trade (GATT), that tariffs must be abolished under a free trade agreement “essentially all trade”. Given that coverage of USJTA tariff reductions is limited, such a critical view appears to be correct.

The jackpot for Japan is outside the agreement – it escaped an increase in tariffs on Japanese automobiles, which the Trump administration had threatened to impose in accordance with Section 232 of the Trade Expansion Act of 1962. The recent announcement of the U.S.-Japan trade agreement (USJTA) must have surprised many in Japan, given its unusual speed. The agreement was reached just six months after the start of the negotiations, a stark contrast to the EU-Japan Economic Partnership Agreement, which lasted more than five years. One of the reasons the United States and Japan were able to conclude this agreement so quickly is that they limited the agreement to two areas: abolition and reduction of tariffs and rules of digital trade. This criticism can be answered by classifying the USJTA as an “interim agreement,” but this leaves a second assertion – that the USJTA does not respect the interim agreement rule. This is because it does not contain a “plan and timetable” for concluding the agreement in accordance with WTO rules (Article XXIV, paragraph 5, paragraph c) of the GATT). So far, there has been no definitive interpretation of the “plan and timetable” and this argument may not be easy to resolve. 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.