Japan-US Trade Pact in effect starting January 1, 2020.

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Mt. Fuji in the background, source: Jane Chang

The Japan-U.S. trade agreement started in April 2019, and starting January 1st, comes into effect, resulting in an immediate cut in tariffs on American farm products and a variety of Japanese industrial goods. Unfortunately, the trade agreement does not include passenger cars and auto parts. In addition to a trade agreement, the US and Japan reached an agreement on digital trade. As the US pulled out of the Trans-Pacific Partnership, this trade agreement was crucial for continued US/Japan trade.

Some terms of the trade deal include a reduction in import duty of US beef from 38.5% to 26.6%, with the ultimate duty rate of 9% in 2033. Other duties on cheese, wine, pork will eventually reach zero. In return, US duties on Japanese air conditioner parts and fuel cells were also removed as part of the deal.

While this current trade deal does not address import duties on cars and parts from Japan, second round talks with Washington (set for April 2020) may result in a trade deal. But the United States maintains import duties on cars and auto parts from Japan, despite strong calls for their abolition by the Japanese side.

We have been keeping up with this new trade deal, if you are wondering how it may impact your business, give us a call or text at 832-896-6288 or send us an email to David Hsu at attorney.dave@yahoo.com or work official email: dh@gjatradelaw.com.

Trump will decide tariffs on auto imports “soon”.

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Today’s November 14th deadline on whether to impose tariffs (duties) on cars and auto parts imported into the US will likely result in President Trump extending the time to make a decision.

These additional tariffs on vehicles and parts are part of the “Section 232” national security tariffs enacted during the Cold-War that could see tariffs as high as 25% on vehicles and parts from the European Union, South Korea, and Japan.

A delay would likely result in a 6-month extension and allow for negotiators from all sides attempt to reach an agreement.

If you are an importer of car parts or vehicles and want to know what you can do, contact experienced trade attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

US and Japan reach trade deal.

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Last week, President Trump and his counterpart Prime Minister Abe of Japan reached a trade deal to cut tariffs and increase trade between the two nations.

Part of the deal includes Japan agreeing to reduce or cancel tariffs on American agricultural exports such as beef, corn, pork and fruit – with the US agreeing to reduce tariffs on bicycles, flowers, tea and other industrial products.

At the same time, the agreement prohibits future tariffs on streaming videos, music and video games.

If you have any questions about how the new trade deal with Japan will impact your business, contact experienced trade attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Japan seeks assurance from US on car tariffs.

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Trade representatives from the US and Japan are working out details for a trade deal between the two nations – with both sides hoping to sign a trade deal this week during the United Nations General Assembly in New York.

Previously, Trump has threatened the imposition of tariffs of upwards of 25% on Japanese cars, and the Japanese want a clause added to any trade deal that would cancel any trade benefits if and when the US imposes tariffs on automobiles.

This is the only issue currently delaying the signing of a long awaited trade deal between the US and Japan.

Other parts of the trade deal are expected to include more access for US farmers to the Japanese market, modernization of digital trade rules, internet development, prohibition of cross-border taxation of e-commerce and data localization requirements.

Potential US Japan deal looks to boost US agriculture exports.

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As promised during his campaign, President Trump withdrew the US from the Trans Pacific Partnership – leaving Canada, Mexico and Australia as the major players; opting instead to enter into bilateral agreements with individual countries.
After the TPP took effect this January, US farm exports to Japan dropped by 2% for the first half of the year, with a projected annual net farm income loss of $4.4 billion annually. This could be due to US exports of beef to Japan now subject to a 38.5% duty, ground pork at 20% and some cheeses at 40%. The lack of a trade deal has also impacted
Japan’s exporters of steel and aluminum to the US. The President has previously threatened Japan with duties on auto imports.
The US and Japan have reached an agreement in principle expect to make the trade deal official in the upcoming months.

Japan downgrades South Korea’s trade status.

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This past Wednesday, Japan downgraded South Korea’s preferential trade status – requiring Japanese manufacturers to now apply for approval for technology-related goods to be exported to South Korea. Japan claims the trade status of South Korea was needed over concerns the technology could be used for military purposes. Prior to Wednesday, exports to South Korea required less compliance as a preferential trade partner. South Korea also announced their action to downgrade Japan’s trade status to take effect later this month (September).

As previously posted on this blog, South Korea accuses Japan using trade as retaliation in responses to court decision granting compensation to individuals who were victims of forced labor during Japan’s occupation of Korea. The AP reports leadership from both countries are working on an agreement.

Citizens from both countries have also joined in street protests and boycotting goods from either country.

US will not impose additional tariffs on Japanese automobiles.

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According to Reuters, President Trump and Japanese Prime Minister Shinzo Abe met last Sunday at the G7 Summit – agreeing that the current duties on cars remain at 2.5% for passenger vehicles and 25% for pickup trucks from Tokyo. Previously, the US did threaten Japan with additional duties of 25% on auto exports to the US under the premise of national security.

U.S. President Donald Trump on Monday said the United States would not imminently impose new tariffs on autos imported from Japan as the largest and third-largest economies continue their trade negotiations. Japan would also agree to greater market access for US agricultural products such as beef and to increase purchases of US corn.

Japan imposes new trade restrictions with South Korea.

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Last Friday, Japan increased export controls on a greater variety of products to South Korea, furthering the two nations into a trade war. The increased controls was in the form of removing South Korea from a “white list” of countires that face less restrictions for importing senstivie technology. Removing South Korea from the white list occurs on August 28th.

In response, South Korea’s President said they would also remove Japan from their own white list. This trade war worries Washington as both sides have threatened to withdraw from an intelligence-sharing deal that would hurt the US’ efforts to partner with South Korea and Japan in dealing with North Korea. Secretary of State Mike Pompeo, South Korea’s foreign minister and Japan’s foreign minister are expected to meet this upcoming Friday in Bangkok.

Japan claims the new export restrictions are not unique to South Korea and not retaliation for the recent South Korean court ruling ordering Japanese companies to pay victims of forced labor during Japan’s colonial occupation of South Korea. The Japanese claimed countries like Taiwan and China will also be subject to export controls. Japan also claims any delays in getting export approval will not be long – even though export approvals for last month’s banned chemicals have yet to be approved.

Will post any updates as soon as the meeting ends on Friday.

Japan and South Korea trade war tensions rise.

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Japan and South Korea trade war tensions rise.

As previously mentioned on this blog, Japan and South Korea are in a trade dispute arising out of a court case granting South Koreans compensation for forced-labor during Japan’s colonial occupation of South Korea.

In response, Japan placed export regulations on chemicals exported to South Korea that are vital for South Korea’s tech industry. The restrictions on exports to South Korea are to take place in August unless an agreement is reached between the two sides. It appears no deal will be reached as both politicians have seen their approval ratings rise since the disputes.

Japan claims national security threat the reason for limiting exports of chemicals to South Korea.

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On July 1st, the Japanese government began restricting exports of two chemicals, fluorinated polyimide and hydrogen fluoride; chemicals needed to produce semiconductors and smartphone and television screens. South Korea is dependent on Japan for this supply. Japanese officials claim the chemicals are “controlled items” (goods with civilian and military applications), and have been “inadequately managed” by South Korean companies.

However, South Korean officials believe the real motive for restricting imports of the two checmicals is a political dispute between the two countries and a recent South Korean court ruling that resulted in the seizing of assets of a Japanese company to pay for reparations for Japan’s actions during World War II.

Japanese exporters of the chemicals now need a license for each one with delays taking up to 90 days. In the meantime, South Korean companies are looking for new suppliers even though stockpiles of the checmicals are enough to meet the current demand.

As in most disputes between two nations, the citizens (well, businesses) lose, South Korean companies can’t purchase the chemicals they want and Japanese companies can’t sell the chemicals they don’t need.