The United States and Japan are the world’s largest and third largest economies, totaling around 30 percent of the world’s economic output. Japan is the fifth largest consumer of U.S. exports, our fourth largest source of imports, and a top-three consumer of Nebraska’s beef, corn, pork, soybean, egg, and wheat exports worldwide. This is why news of a potential trade agreement to be negotiated between the United States and Japan should be greeted warmly.
Modern trade agreements aren’t just negotiated to address tariffs – they also typically address other issues such as intellectual property protection and accounting standards. In just one example, Japan currently levies a tax of 38.5%, which can escalate as high as 50%, on American exports of beef. Countries which have successfully negotiated trade agreements with Japan, such as Australia, currently have an advantage over the US in the Japanese market because they face dramatically lower rates of tariffs.
Because such an agreement would hold enormous benefits for Nebraska ranchers and farmers, I introduced legislation last year expressing support in Congress for a bilateral trade agreement to be negotiated between our two countries. I have further expressed this sentiment to President Trump and senior administration officials on many occasions. I made the case directly to Ambassador Robert Lighthizer, the U.S. Trade Representative, during the last week of September.
International trade does not have to be a zero-sum game. In the case of Japan, they have negotiated bilateral trade agreements with Australia, the European Union, and Mexico, among others, which means their producers enjoy preferential access to Japanese markets relative to American producers. We need to even the playing field and give Nebraska producers the ability to compete fairly.
President Trump and Japanese Prime Minister Shinzo Abe recently met at the United Nations General Assembly in New York to discuss our trade relationship. After the meeting they issued a joint statement recognizing the importance of reciprocal trade and the need for a trade agreement between our countries. Given China’s growing influence in the Asia-Pacific region, which threatens Japan, and also our current trade disputes with China, increasing trade and security ties between the U.S. and allies like Japan could help to ensure that China behaves appropriately going forward.
I support trade agreements because reducing regulations, decreasing taxes, and facilitating productive trade policy are among the best ways the federal government can stimulate sustainable, long-term economic growth. So far, President Trump has delivered on his promises to cut burdensome regulations and sign tax reform into law. Negotiating a trade agreement with Japan would add to our list of accomplishments during his first two years in office.