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“The central basis of the WTO is the most favoured nation principle, according to which trade benefits must always apply equally to all WTO members. Exceptions can only be granted if bilateral agreements between WTO member states essentially liberalise all trade, as is the case with the EU internal market,” said Felbermayr. “The trade agreement between the United States and Japan is clearly contrary to this exception to the principle of the most favoured nation. In principle, all WTO member countries would be entitled to the trade liberalization agreed upon, but no country seems to want to risk such a conflict with the United States. 9. www.whitehouse.gov/briefings-statements/president-donald-j-trump-secured-tremendous-victory-american-farmers-businesses-new-japan-trade-agreements/. Under President Trump`s leadership, the United States and Japan agreed on early outcomes of negotiations on market access for certain agricultural and industrial products, as well as digital trade. The United States looks forward to continuing negotiations with Japan for a comprehensive agreement that would address the remaining tariff and non-tariff barriers and ensure fairer and more balanced trade. President Trump, as part of the government`s broader trade agenda, has long criticized the trade imbalance between the United States and Japan, the world`s largest and third-largest economies, respectively. To reduce the U.S. trade deficit by $56.7 billion, President Trump and Japanese Prime Minister Shinzo Abe have jointly announced their intention to open negotiations for a U.S.-Japan trade deal in 2018. The United States and Japan agree on merchandise trade and digital trade, President Trump and Prime Minister Abe announced the trade agreement on September 25, 2019 at the United Nations General Assembly in New York.6 Japan liberalized 96% of its tariffs in its trade agreement with the EU (EUJEPA) and even 97% under the Trans-Pacific Partnership (CPPPT).

The agreement consists of two main elements: a reduction in tariffs on agricultural and industrial trade between the two countries and a separate agreement on digital trade. The digital part prohibits data geolocation requirements and barriers to cross-border data flows. Digital trade between the two countries amounts to $38 billion a year and U.S. Trade Representative Robert Lighthizer called the new digital trade agreement “the gold standard.” The authors warn that these small bilateral agreements are becoming the rule in the WTO, for example to settle trade disputes between the US and the EU. This would further undermine WTO rules and harm international trade as a whole. 2. ustr.gov/about-us/policy-offices/press-office/press-releases/2019/december/ambassador-lighthizer-lauds-japan. 5. ustr.gov/countries-regions/japan-korea-apec/japan.

Other bilateral trade agreements between the United States, such as Canada or Mexico, are much broader and cover far more tariffs, usually well above 90%. Japan has requested ratification by submitting the agreements to its bicameral legislation, the National Parliament. On November 19, 2019, the lower house of Parliament, the House of Representatives, voted on both agreements. On 4 December 2019, the Landtag approved the agreements after adoption by the Council, the House of Lords of the Landtag. In the absence of congressional approval in the United States, President Trump signed the agreements himself on December 26, 2019. Both agreements came into force on January 1, 2020. The U.S. tariff lists only 241 customs lines for which the United States would eliminate or reduce tariffs to Japan during the transition period.