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Apparel and Textile Duty-Free Status Key Objective of US-Japan Trade Agreement

The U.S. will seek comprehensive duty-free treatment for textile and apparel products, and other industrial goods in the proposed bilateral free trade agreement (FTA) with Japan.

It will also aim to ensure that Japan avoids manipulating exchange rates to prevent effective balance of payments adjustment or to gain an unfair competitive advantage and wants the agreement to have a mechanism to ensure transparency and take appropriate action if Japan negotiates an FTA with a non-market country, presumably China.

These provisions were included in the Office of the U.S. Trade Representative’s (USTR) negotiating objectives for a U.S. trade agreement with Japan. Formal discussions with Japan can begin as early as Jan. 21, based on the Bipartisan Congressional Trade Priorities and Accountability Act of 2015.

The objectives also include strengthening procedures and creating new ones to address antidumping and countervailing duty evasion, which has been a key tool for the Trump administration specifically, and the U.S. in general, in recent years.

The notification to Congress from USTR states that the U.S. wants to reduce tariff and non-tariff barriers and achieve fairer and more balanced trade with Japan. The U.S. goal is to improve the trade balance and reduce the trade deficit with Japan, increase transparency in import and export licensing procedures, and discipline import and export monopolies to prevent trade distortions.

The U.S. imported $483.96 million worth of apparel and textiles from Japan in the year through October, a 5 percent increase over the year-earlier period. In the same time period, the U.S. exported $568,501 in textiles and apparel, a 9.26 percent gain over the previous 12 months.

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Additional provisions will be targeted at obtaining fair and more equitable trade in the motor vehicle sector and securing greater regulatory compatibility to facilitate U.S. exports in key sectors such as pharmaceuticals, medical devices, cosmetics, information and communication technology equipment, motor vehicles and chemicals.

In the area of customs, the U.S. wants to increase regulatory transparency and ensure more expedience in releasing shipments after determining compliance with applicable laws and regulations. This area would include streamlined and expedited customs treatment for express delivery shipments and simplified customs procedures for low-value goods, which would facilitate cross-border e-commerce.

On September 26, 2018, President Trump and Prime Minister Abe announced that the U.S. and Japan would begin negotiations for a U.S.-Japan Trade Agreement.

U.S. goods and services trade with Japan totaled an estimated $283.6 billion in 2017. Exports were $114 billion, while imports were $169.5 billion. The U.S. goods and services trade deficit with Japan was $55.5 billion in 2017.

Japan was the U.S.’s fourth-largest goods export market in 2017. The top export categories were machinery, optical and medical instruments, aircraft, mineral fuels and electrical machinery.

Japan was the U.S.’s fourth largest supplier of goods imports in 2017. U.S. goods imports from Japan totaled $136.5 billion in 2017, up 3.4 percent from 2016. The top import categories vehicles, machinery, electrical machinery, optical and medical instruments, and aircraft.