Japan Negotiating Objectives Include Mention of Reciprocal de Minimis Values

The Office of the U.S. Trade Representative copied most of the NAFTA priorities' language on customs and trade facilitation for its U.S.-Japan negotiating priorities, with one major exception. The USTR raised the idea of matching de minimis value thresholds as part of a trade deal. Specifically, it wrote that an agreement should "provide for simplified customs procedures for low-value goods and a more reciprocal de minimis shipment value."

The NAFTA objectives called for a provision to make "de minimis shipment value comparable to the U.S. de minimis shipment value of $800." The idea that the U.S. might lower its de minimis level to match those of trading partners was first raised in a footnote of the new NAFTA's text (see 1810190043). That footnote is a source of concern for multiple industries (see 1811070013).

Autos are largely to blame for the trade deficit with Japan, and reducing that deficit is the first priority mentioned in the 14-page U.S.-Japan document. The USTR says its goal is to "secure additional provisions as necessary to obtain fair and more equitable trade in the motor vehicle sector, including provisions designed to address non-tariff barriers in Japan."

The negotiating priorities for the Trans-Pacific Partnership, which included Japan, were more detailed on this front, when the former USTR said he was seeking "enforceable commitments related to the automotive sector that will address a broad range of non-tariff measures -- including those related to regulatory transparency, standards, certification, financial incentives, and distribution." Those priorities also mentioned the U.S. desire to establish "an accelerated dispute settlement procedure that would apply to the automotive sector that includes a mechanism to 'snap back' tariffs as a remedy, as well as a special motor vehicle safeguard."

Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, criticized the objectives, released late Dec. 21, as too vague. "The purpose of the requirement to publish a detailed and comprehensive summary of negotiating objectives is to make the public aware of what the executive branch is seeking. These objectives do not do that," he said in a statement after the release.

In the introduction to the summary, the USTR wrote: "We may seek to pursue negotiations with Japan in stages, as appropriate, but we will only do so based on consultations with Congress." Wyden is also critical of that idea. "I am concerned that if the administration negotiates with Japan in 'stages' -- as it continues to signal it may do -- it will end up choosing a quick, partial deal instead of tackling all of the topics that are critical to achieving the best possible results for American workers and exporters." Sen. Chuck Grassley, R-Iowa, who will lead the Finance Committee in January, did not respond to the USTR release.

Apparel interest groups were among those who submitted testimony on their hopes for the free-trade agreement, and they asked that Mexican-sewn garments made with U.S. fabric be allowed to enter Japan duty free -- that would have been the case under TPP, because both Mexico and the U.S. were originally in that agreement. That idea was not mentioned in the priorities, but neither was preserving "yarn forward" rules of origin, which splits apparel manufacturers and textile manufacturers (see 1811280062).

In the TPP negotiating priorities, yarn forward was the first of six bullet points on textiles and apparel. In this summary, it merely says the U.S. hopes to "secure duty-free access for U.S. textile and apparel products and seek to improve competitive opportunities for exports of U.S. textile and apparel products."