US-Japan Trade Agreement

Presidential Proclamation 9974 of December 26, 2019 – contains changes to countries eligible for aspects of Africa Growth and Opportunity Act, implements U.S. duty reduction commitments from U.S.-Japan trade agreement and other matters

On December 30, 2019, Presidential Proclamation 9974 was published in the U.S. Federal Register. 84 Fed. Reg. 72,187-72,211. The proclamation addresses a number of trade issues, including:

(1) removing Cameron from beneficial tariff treatment under the African Growth and Opportunity Act (“AGOA”), 19 U.S.C. 2466a, effective January 1, 2020 [see 84 FR 72,187, paragraphs 1-4];

(2) finding that Niger, the Central African Republic, and The Gambia are not eligible for certain preferential access on textiles and apparel under 19 U.S.C. 3721(a) for failure to establish “effective visa systems and related customs procedures” to minimize shipment of nonqualified goods, although Niger and Guinea-Biseau were found to qualify under 19 U.S.C. 3721(c) as lesser developed sub-Suharan countries [see 84 FR 72,187, paragraphs 4-6];

(3) extends through the close of December 31 2020, duty-free access of specified quantities of certain agricultural products (list of products is contained in Annex I to the Proclamation) [see 84 FR 72,187-72,188, paragraphs 7-14 and 84 FR 72, 192, Annex I];

(4) takes actions to implement U.S. obligations undertaken with Japan in the U.S.-Japan trade agreement [see 84 FR 72,188-72,189, paragraphs 15-18 and 84 FR 72,193-72,208, Annexes II and III];

(5) modifications to the tariff schedules in connection with the U.S.-Chile Free Trade Agreement [see 84 FR 72,189-72,190, paragraphs 19-15 and 84 FR 72,209-72,211, Annex IV].

After reviewing the issues and bases for designated actions, the Presidential Proclamation then lays out the actions being implemented by proclamation. 84 FR 72,190-72,211 (including Annexes). Proclamation 9974 is attached below.

12-26-2019-Presidential-Proclamation-to-take-Certain-Actions-under-the-AGOA-and-for-Other-Purposes

The significant trade issue for the United States is obviously implementing the U.S.-Japan trade agreement on tariff reductions and Japan’s participation in the TRQ on beef. As reviewed in prior posts (December 10 and October 26, 2019), the U.S.-Japan trade agreements affect a relatively small amount of U.S. trade with Japan and Japanese trade with the U.S., appear to be largely based on the U.S. desire to obtain parity for U.S. agricultural producers with CPTPP members following the U.S. withdrawal from the TPP agreement and establishing a strong agreement on digital trade with a trading partner with similar high standards as existing U.S. standards. The big question for U.S.companies and workers and their Japanese counterparts is whether either country has the current political bandwidth to put in place an FTA vs. the small market liberalization agreement and digital trade agreement achieved to date.

Turning to the actions on individual Sub-Saharan countries, the importance is almost certainly greater for the African countries than for the U.S. Specifically, for the individual African countries who are losing certain AGOA benefits or finding themselves now entitled, trade flows are relatively minor from a U.S. perspective; from the African country perspecitive, the importance may be significantly greater. For example, the United States in 2018 had imported $63 million of merchandise from Cameroon duty free under AGOA. This was out of total US imports from Cameroon of $212 million ($72 million were otherwise duty-free). U.S. imports from the other Sub-Saharan countries in 2018-2019 have been significantly smaller. Nonetheless, duty-free access remains important for all of these countries going forward.

The extension of the market access for Israeli agricultural products for another year has been occurring annually since the original agreement’s term expired. With all that is on the table for the Trump Administration, it is not clear if the 2004 agreement will be renegotiated in 2020 or simply rolled over for another year at the end of 2020.

Finally, the modifications to the tariff schedule for the US-Chile FTA seem to be largely technical in nature.

With the U.S.-China Phase 1 Agreement to be signed on January 15 (and expected to go into effect 30 days later) and with the USMCA awaiting Senate passage of implementing legislation, 2020 could see some significant reduction of barriers with China and the implementation of USMCA (assuming Canadian passage). But the Presidential Proclamation 9974 helped start 2020 with a modest trade liberalization agreement with Japan and the tweaking of a number of smaller agreements or country participation in parts of AGOA.

U.S.-Japan Trade Agreements to Go Into Effect on January 1, 2020

The two trade agreements that Prime Minister Abe and President Trump announced on September 25, 2019 and that were signed on October 7, 2019 will go into effect at the beginning of 2020.

The U.S. having notified Congress of its intent to enter into negotiations with Japan in 2018, limited what it negotiated in these current agreements to tariff reductions and digital trade (presumably requiring no U.S. law changes) and thus will be handled by Presidential Proclamation. Questions about compliance with consultation requirements have been raised by House Ways and Means Democrats, and there are questions about whether such partial agreements are consistent with U.S. and Japanese obligations under the WTO (GATT 1994 Art. XXIV). Nonetheless, USTR Lighthizer has indicated that following completion of the Japanese approval process last week that President Trump will be issuing a Proclamation this week (week of December 9).

In Japan, the Lower House of the Diet approved the deal in November and the Upper House last week.

The two countries will implement the agreements on some tariff reductions/eliminations and on digital trade on January 1, 2020.

As reported in the Japanese press, Japan is lowering or removing tariffs on various agricultural products to put the U.S. on a level playing field with other countries who continued with the Trans Pacific Partnership agreement after the U.S. withdrew. The value of U.S. agriculture exports covered by reductions or eliminations was listed at $7.2 billion. See The Japan Times, Upper House approves U.S.-Japan trade deal, https://www.japantimes.co.jp/news/2019/12/04/business/economy-business/upper-house-approves-united-states-japan-trade-deal/#.Xe-8w-hKiUk.

In an earlier post, the loss of market share by U.S. agriculture exporters of key commodities in 2019 because of the disadvantage in tariff rates vs. other major agricultural exporters was reviewed. The reduction in US exports has continued through October based on data now available. Thus, U.S. exports of corn (HS 1005) to Japan are down 24.7% in the first ten months of 2019; pork exports (HS 0203) are down 7.58%; fresh or chilled beef exports (HS 0201) are down 8.55%; wheat/meslin exports (HS 1001) are down 13.25%; frozen beef exports (HS 0202) are down 18.05%; frozen fish exports (HS 0303) are down 29.85% and fresh or dried nut exports (HS 0802) are down 7.39%.

The United States is reducing or eliminating tariffs on imports from Japan that in 2018 were around $7.1 billion. There are a few agriculture products but most are manufactured goods. The two countries have committed to starting negotiations on a broader deal (phase 2) to begin in April or May 2020. Total imports from Japan in 2018 were $143.7 billion, so the phase 1 coverage addresses only 4.9% of U.S. imports from Japan. Many other imports from Japan are already duty free. Thus, the products from Japan covered by the phase 1 agreement subject to reductions or eliminations in tariffs accounted for 9.8% of the calculated duties on total U.S. imports from Japan in 2018.

Nearly half of all duties the U.S. collected on imports from Japan occurred on motor vehicles and parts (HS Chapter 87)(49.1% of total collected duties in 2018). While elimination of duties on motor vehicles is a high priority for Japan, any reduction will be part of the phase 2 negotiations.

For U.S. agriculture producers who have had a very difficult time from trade retaliation by many trading partners over the last two years. the phase 1 tariff agreement is welcome news.

As both the U.S. and Japan have high level digital trade systems, the main importance of the digital trade agreement will be as a model for efforts with other countries going forward.

Conclusion

The Trump Administration’s push for a phase 1 deal with Japan to offset significant disadvantages suffered by U.S. agriculture exporters from the U.S. withdrawal from the TPP has received buy-in from Japan (presumably in part to limit the likelihood of action against Japan from the Section 232 investigations on automobiles and parts)and despite the questions on how this piecemeal approach comports with international obligations of both countries.

In what is looking to be a busy finish to 2019 for the United States on trade issues — USMCA appearing close to consideration by the U.S. Congress (the revisions to the agreement to be addressed in Mexico today (Dec. 10) and reportedly sufficient to have the revised agreement go to the House next week); a possible phase 1 US-China deal still possible ahead of new tariffs kicking in on imports from China on December 15 — the U.S.-Japan trade agreement is a market opening event of some importance for U.S. agriculture and the agreement on digital trade is one with a major trading partner and reflects U.S. ambitions.

Two Initial U.S. Trade Agreements with Japan – What They Cover and What Will Follow

On October 16, 2018, US Trade Representative Robert Lighthizer sent letters to Congress informing Congress of the President’s intent to enter trade negotiations with Japan.  Section 105(a)(1)(A) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 was referenced in the letters.  The letters indicated that negotiations with Japan could proceed in phases, that the administration would consult with Congress and that Administration negotiating positions were consistent with the priorities and objectives contained in section 102 of the 2015 law.  In December 2018, USTR published a summary of the Administration’s specific negotiating objectives with Japan.

Less than one year later, on September 25, 2019, President Trump and Prime Minister Abe announced that agreements had been reached on certain market access issues (agriculture and some other products by Japan; a large number of industrial goods and a few agricultural products by the U.S.) and a digital trade agreement between the two countries.  The two agreements and a series of side letters were signed on October 7.  It is expected that the two agreements will take effect on January 1, 2020, following action by the Diet in Japan and the publication of tariff reductions by the Administration in the U.S. pursuant to existing tariff reduction authority (and assuming the obligations of the U.S. under the digital trade agreement do not require any changes to U.S. law).   As indicated in the original notification, the negotiations are being undertaken in phases, with additional negotiations to commence four months after the two initial agreements take effect as reviewed in language on USTR’s webpage.

On October 7, 2019, USTR Robert Lighthizer and Ambassador of Japan to the United States Shinsuke J. Sugiyama signed the U.S.-Japan Trade Agreement and U.S.-Japan Digital Trade Agreement. In addition, as announced in the September 25, 2019, Joint Statement of the United States and Japan, the United States and Japan intend to conclude consultations within 4 months after the date of entry into force of the United States-Japan Trade Agreement and enter into negotiations thereafter in the areas of customs duties and other restrictions on trade, barriers to trade in services and investment, and other issues in order to promote mutually beneficial, fair, and reciprocal trade. Entry into force of the U.S.-Japan Trade Agreement and U.S.-Japan Digital Trade Agreement is currently pending finalization of domestic procedures in both countries.

https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations

Help for U.S. Agriculture

Having pulled out of the Trans Pacific Partnership [“TPP”] agreement in 2017, the U.S. has been anxious to achieve an agreement with Japan – a country that the Administration has indicated accounts for 95% of GDP of countries within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [“CPTPP”] with whom the U.S. does not presently have an FTA.  Japan has been a large market for U.S. beef, pork and wheat among other agricultural products.  With the CPTPP having entered into force on December 31, 2018 for Japan and many of the major agricultural export members of the CPTPP (Australia, Canada, Mexico and New Zealand) and with the Japan-EU FTA (entered into force February 1, 2019), U.S. agriculture has been concerned with loss of market share with the significant differences in tariff rates applicable to imports from Japan’s CPTPP partners and available to the EU.  In addition, U.S. agriculture has been buffeted over the last two years by retaliation by various countries in retaliation for US actions under section 232 on steel and aluminum products (China, EU, Canada, Mexico, India, Turkey, Russia) and under section 301 for intellectual property and other issues by China.

Looking at domestic exports to Japan of a few U.S. agricultural products, it is clear that U.S. exporters were seeing reduced volume and value of products in 2019.  Volume data are shown below along with the percent change between the first eight months of 2018 and 2019 (quantities are in metric tons):

Product 2016 2017 2018 Jan.-Aug. 2018 Jan-Aug. 2019 % Change
Beef –HS 0201 & 0202 203,852.8 258,193.7 278,800.7 191,672.7 173,023.5 -9.73%
Pork – HS 0203 361,530.9 365,130.6 366,626.0 245,970.0 233,698.2 -4.99%
Wheat – HS 1001 2,700,066 3,049,369 2,860,624 1,942,929 1,678,292 -13.62%
Corn – HS 1005 11,891,952 12,390,152 15,276,106 10,972,609 8,874,393 -19.12%

In contrast to declining U.S. exports to Japan in the first eight months of 2019 compared to the comparable period in 2018, total imports into Japan from all countries increased for three of the four products reviewed.  For beef, Japan imports increased by 1.13% on a volume basis.  Similarly, imports of pork products into Japan increased by 4.29% on a volume basis.  Total imports of corn into Japan also increased slightly (0.79%) on a volume basis.  While the volume of wheat imports from all countries declined by 7.91%, the rate of decline was significantly smaller than the contraction of US exports to Japan of wheat.  Thus, the U.S. saw reduced market share in all four of these major product categories and in many others as well.  Indeed US domestic exports of all agricultural products (HS Chapters 1-24) grew 15.28% on a value basis between 2016 and 2018 from $11.89 billion to $13.71 billion before declining 7.75% in the first eight months of 2019.  There were many US export categories that saw declines in value  during the first eight months of 2019 (HS 0201, fresh or chilled beef, -6.7%; HS 0202, frozen beef, -18.8%; HS 0203, fresh, chilled or frozen pork, -6.2%; HS 0303, frozen fish other than fish fillets, -28.4%; HS 0802, nuts, -8.0%; HS 1001, wheat, -18.3%; HS 1005, corn, -16.2%; HS 1201, soybeans, -1.7%).

Annex I to the U.S.-Japan Trade Agreement identifies the various commitments on liberalization that Japan is making, almost all on agricultural products. 

https://ustr.gov/sites/default/files/files/agreements/japan/Annex_I_Tariffs_and_Tariff-Related_Provisions_of_Japan.pdf 

USTR’s fact sheet provides the following summary of benefits for U.S. agriculture:

“In the U.S.-Japan Trade Agreement, Japan has committed to provide substantial market access to American food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero). Importantly, the tariff treatment for the products covered in this agreement will match the tariffs that Japan provides preferentially to countries in the CP-TPP agreement.

“Out of the $14.1 billion in U.S. food and agricultural products imported by Japan in 2018, $5.2 billion were already duty free. Under this first-stage initial tariff agreement, Japan will eliminate or reduce tariffs on an additional $7.2 billion of U.S. food and agricultural products. Over 90 percent of U.S. food and agricultural imports into Japan will either be duty free or receive preferential tariff access once the Agreement is implemented.

KEY ELEMENTS: U.S. AG EXPORTS TO JAPAN

Tariff Reduction:  For products valued at $2.9 billion, Japan will reduce tariffs in stages. Among the products benefitting from this enhanced access will be:

  • fresh beef
  • frozen beef
  • fresh pork
  • frozen pork

Tariff Elimination: Tariffs will be eliminated immediately on over $1.3 billion of U.S. farm products including, for example:

  • almonds
  • blueberries
  • cranberries
  • walnuts
  • sweet corn
  • grain sorghum
  • food supplements
  • broccoli
  • prunes

“Other products valued at $3.0 billion will benefit from staged tariff elimination. This group of products includes, for example:

  • wine
  • cheese and whey
  • ethanol
  • frozen poultry
  • processed pork
  • fresh cherries
  • beef offal
  • frozen potatoes
  • oranges
  • egg products
  • tomato paste

Country Specific Quotas (CSQs): For some products, preferential market access will be provided through the creation of CSQs, which provide access for a specified quantity of imports from the United States at a preferential tariff rate, generally zero. CSQ access will cover:

  • wheat
  • wheat products
  • malt
  • glucose
  • fructose
  • corn starch
  • potato starch
  • inulin

Mark Up: Exports to Japan of wheat and barley will benefit from a reduction to Japan’s “mark up” on those products. Japan’s imports of U.S. wheat and barley were valued at more than $800 million in 2018.

Safeguards: This agreement provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges, and race horses, which will be phased out over time.”

https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact-sheet-agriculture%E2%80%90related

There are also five side letters on specific agricultural products and one on safeguard provisions.  The specific products covered by such letters are alcoholic beverages, beef, rice, skimmed milk, and whey.  These side letters can be found here:  https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-agreement-text.

What Japan Gets from the U.S. in terms of Tariff Reductions

Annex II contains the list of liberalization commitments on tariffs on goods the U.S. is providing Japan under the agreement.

 https://ustr.gov/sites/default/files/files/agreements/japan/Annex_II_Tariffs_and_Tariff-Related_Provisions_of_the_United_States.pdf 

The U.S. agreed to some liberalization of a limited number (42) of six-digit HS categories.  USTR indicated in its fact sheet that imports from Japan in these 42 categories had been $40 million in 2018.  Twelve of the forty-two categories involve plants and cut flowers, two deal with yams, six deal with melons of various types, one covers fresh persimmons, two with green tea, ten with confectionery products, one with chewing gum, one covers soy sauce, and seven cover various other items.

The bulk of what Japan obtains in tariff liberalization occurs in industrial goods (chapters 25-99) though motor vehicles and parts are not part of the liberalization.  There are some chemicals, a few rubber products, mirrors, some steel products and the vast majority from HS Chapters 84 and 85. 

As the Administration is not intending to submit implementing legislation, the Administration is limited to the tariff reduction authority contained in Section 103(a)(3) of the Bipartisan Congressional Trade Priorities and Accountability Act, 19 U.S.C. 4202(a)(3).  Thus, for  any of the products on which liberalization is to occur where Column 1 tariffs are greater than five percent ad valorem,  tariffs will be reduced but not eliminated.  Most products in HS Chapters 84 and 85 included for tariff reductions are below 5% but many agricultural products and certain industrial tariffs (e.g., bicycles and parts, HS 8712 and HS 8714) are above 5%.

WTO Compatibility

Both the U.S. and Japan intend to pursue further negotiations starting in early May 2020.  Certainly the Administration summary of negotiating objectives articulate aims which comport with obtaining a comprehensive trade agreement that would be comparable to other FTAs in terms of trade in goods coverage.  But the U.S.-Japan Trade Agreement dealing with tariffs does not by itself qualify as a Free Trade Agreement (“FTA”) within the meaning of GATT Article XXIV:8(b) where substantially all tariffs on goods trade are eliminated within a reasonable period of time.  The Agreement’s failure to provide for duty-free treatment for substantially all trade in goods is true for Japan’s treatment of imports from the U.S. as well as the U.S.’s treatment of imports from Japan.  For example, U.S. exports to Japan in 2018 were only 20% in agricultural goods, with fully 80% of exports in industrial goods.  With few exceptions, industrial goods are not the subject of the current agreement in terms of Japanese liberalization (though Japan has zero tariffs on many industrial goods already).  Similarly, motor vehicle goods and parts are not part of the trade liberalization.  There are Column 1 tariffs for most HS Chapter 87 goods.  Excluding bicycles and parts which are part of the current agreements, imports from Japan under just Chapter 87 were more than $53 billion in 2018 or some 37% of total imports.  Thus, the current agreement, absent a future enlargement would likely be viewed as violating MFN requirements of the WTO as not a permissible FTA under GATT Art. XXIV:8(b).

There have been no disputes over whether particular FTAs  fail to satisfy the requirements of Article XXIV, and it is novel for a trade agreement to be done in phases.  Assuming the U.S. and Japan complete their negotiations and implement the resulting enlarged agreement in the next year or two, the final agreement will likely be WTO consistent, regardless of views of the phase approach and initial agreement reached.

U.S.-Japan Digital Trade Agreement

Digital trade is a rapidly growing part of international commerce.  The U.S. has been seeking either a digital trade chapter (e.g., U.S.-Mexico-Canada Agreement [“USMCA”]) or where negotiations are done in phases, as a stand-alone agreement.  The latter is what has emerged from the talks to date with Japan.  The U.S.-Japan Digital Trade Agreement has been described by the Administration as the “gold standard” and similar to the chapter in the USMCA.  The USTR fact sheet lays out what the agreement achieves as perceived by the Administration:

“FACT SHEET U.S.-Japan Digital Trade Agreement

“As two of the most digitally-advanced countries in the world, the United States and Japan share a deep common interest in establishing enforceable rules that will support digitally-enabled suppliers from every sector of their economies to innovate and prosper, and in setting standards for other economies to emulate.

“The United States-Japan Digital Trade Agreement parallels the United States-Mexico-Canada Agreement (USMCA) as the most comprehensive and high-standard trade agreement addressing digital trade barriers ever negotiated. This agreement will help drive economic prosperity, promote fairer and more balanced trade, and help ensure that shared rules support businesses in key sectors where both countries lead the world in innovation.

“Key outcomes of this agreement include rules that achieve the following:

  • Prohibiting application of customs duties to digital products distributed electronically, such as e-books, videos, music, software, and games.
  • Ensuring non-discriminatory treatment of digital products, including coverage of tax measures.
  • Ensuring that data can be transferred across borders, by all suppliers, including financial service suppliers.
  • Facilitating digital transactions by permitting the use of electronic authentication and electronic signatures, while protecting consumers’ and businesses’ confidential information and guaranteeing that enforceable consumer protections are applied to the digital marketplace.
  • Prohibiting data localization measures that restrict where data can be stored and processed, enhancing and protecting the global digital ecosystem; and extending these rules to financial service suppliers, in circumstances where a financial regulator has the access to data needed to fulfill its regulatory and supervisory mandate.
  • Promoting government-to-government collaboration and supplier adherence to common principles in addressing cybersecurity challenges.
  • Protecting against forced disclosure of proprietary computer source code and algorithms.
  • Promoting open access to government-generated public data.
  • Recognizing rules on civil liability with respect to third-party content for Internet platforms that depend on interaction with users.
  • Guaranteeing enforceable consumer protections, including for privacy and unsolicited communication, that apply to the digital marketplace, and promoting the interoperability of enforcement regimes, such as the APEC Cross-Border Privacy Rules system (CBPR).
  • Ensuring companies’ effective use of encryption technologies and protecting innovation for commercial products that use cryptography, consistent with applicable law.

“Together, these provisions will set predictable rules of the road and encourage a robust market in digital trade between the two countries – developments that should support increased prosperity and well-paying jobs in the United States and Japan.”

https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/october/fact-sheet-us-japan-digital-trade-agreement

The agreement represents the U.S. achieving the negotiating objectives that it identified for digital trade in USTR’s summary of negotiating objectives (page 6) – no customs duties on digital trade (Art. 7 of Agreement), non-discriminatory treatment of digit trade in Japan (Art. 8 of Agreement), rules to limit interference with transborder flows of data (Art. 11 of Agreement), rules preventing governments from disclosing computer codes or algorithms (Art. 17 of Agreement), and limiting non-IPR civil liability for online platforms for third party content (Art. 18 of Agreement).  https://ustr.gov/sites/default/files/2018.12.21_Summary_of_U.S.-Japan_Negotiating_Objectives.pdf

There are, of course, many other provisions in the Agreement, some dealing with privacy, some dealing with access to government information, some dealing with cybersecurity.  In light of the stand-alone nature of the Agreement, the U.S. has also included exclusion provisions for national security and other purposes (e.g., GATT Art. XX, prudential purposes).

The Administration’s ability to enter into the agreement and have it take effect on January 1 is premised presumably on the agreement being consistent with existing U.S. law and practice and hence not needing legislative amendments to address.

WTO Consistency

Because the WTO’s primary agreements flow from the Uruguay Round, there is limited coverage of digital trade within the WTO (there has been a moratorium, extended at each Ministerial on imposition of customs duties on digital goods).  Thus, there are no WTO-consistency issues with the Agreement Between the United States and Japan Concerning Digital Trade Agreement.

Conclusion

Japan is the world’s third largest economy and an important trading partner for the United States.  The intention to start negotiations with Japan was one of three notifications of intended negotiations sent to Congress by the Trump Administration (Canada and Mexico, the EU being the others).  USMCA is awaiting final amendments to permit a Congressional vote and the EU talks have not advanced significantly at this point.  The Administration has adopted the novel approach of doing negotiations with Japan in phases.  The first phase of tariff liberalization has focused on U.S. agricultural interests and offsetting disadvantages for US agricultural exporters from the CPTPP entering into force at the beginning of the year and the Japan-EU agreement which took effect on February 1, 2019.  The agreement appears to move U.S. agricultural producers back to a competitive position with the other major agricultural exporters covered by the CPTPP and Japan-EU agreements.  The legitimacy of the first agreement depends on there being a broader agreement with Japan that the U.S. reaches in reasonably prompt fashion. 

The second agreement on digital trade reflects the continued growth and importance of digital trade to both the U.S. and Japan and the adoption of provisions the U.S. has been pursuing in recent years.

In short, concluding the two agreements should be helpful to U.S. trade interests.  However, there is a lot of work left to do with our important trading partner and ally, Japan, to achieve an overall result that is consistent with our WTO obligations.