However, the logic behind a trade deal with Japan goes beyond the size of the market or the mounting tariff disadvantage faced by American farmers and manufacturers. Japan boasts a capital-rich, technologically sophisticated economy, and Japanese companies share many of the concerns of U.S. firms about the challenges of global trade, innovation, and digitalization.
Given these shared concerns, the U.S.-Japan trade negotiations represent a chance for our countries to write the rules of global trade in the 21st century. Take business services, which today employ 50% more Americans than manufacturing. The Internet is making more of these services tradeable every day, and with the right trade rules, the U.S. and Japan can reap substantial benefits.
Negotiators can also build on the recently completed U.S.-Mexico-Canada Agreement, which raised the bar for global trade rules. To illustrate, when NAFTA was negotiated a quarter century ago, there was no e-commerce, so it’s no surprise the agreement did not address this booming sector. Here, USMCA’s digital trade chapter sets a new, high standard, and the agreement establishes a framework for cooperation against cyber threats.
Similarly, USMCA modernizes protection for intellectual property. The cutting-edge medicines known as biologics are a case in point—the old NAFTA did not protect them for the simple reason that they had not yet been invented.
In addition, USMCA includes strong rules blocking “behind the border” barriers against U.S. exports. All too often, foreign governments deploy regulations or standards in an arbitrary way to block imports. USMCA prohibits this kind of protectionism in disguise.
It’s also worth underscoring what a new agreement between the U.S. and Japan should not include. Both sides must reject so-called “voluntary export restraints” and “orderly marketing agreements,” which are just fancy names for managed trade. Our countries are champions of free enterprise and free markets, not the socialist mindset that believes government bureaucrats should steer the economy.
We must also end the U.S. tariffs on steel and aluminum from Japan and the threat of tariffs on autos and auto parts. These “Section 232” tariffs are based on a determination that these imports threaten U.S. national security—which the Japanese understandably reject.
In fact, since World War II, the U.S. and Japan have become increasingly close allies, and we share a strong commitment to democracy, peace, and stability. Building on that foundation with a trade agreement—as the U.S. has already done with other Asian allies—is critical to managing the challenges of tomorrow.
We can’t allow ourselves to fall behind on trade. Working with partners such as Japan, we need to tear down trade barriers—not erect new ones. We need to write the rules of global trade, or they will be written for us in ways that won’t favor U.S. jobs. For all these reasons, the time is now for a U.S.-Japan trade agreement.
Commentary by Tom Donohue, president and CEO of the US Chamber of Commerce.
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