Japan estimates U.S. trade deal will boost GDP by 0.8% over 10-20 years

TOKYO (Reuters) - The trade deal reached between Japan and the United States is expected to boost Japan’s economy by about 0.8% over 10-20 years when the benefits fully kick in, the Japanese government said on Friday.

FILE PHOTO: An industrial port is pictured in Tokyo, Japan, May 23, 2019. REUTERS/Kim Kyung-Hoon/File Photo

The deal is estimated to contribute about 4 trillion yen ($36.81 billion) to Japan’s gross domestic product based on its fiscal 2018 GDP, and the pact will create about 280,000 jobs in Japan, it said.

The United States and Japan signed a limited trade deal that cuts tariffs on U.S. farm goods, Japanese machine tools and other products while further staving off the threat of higher U.S. car duties.

The estimate is still provisional and is based on the premise that the United States would eliminate its tariffs on Japanese autos and auto parts, the government said.

Japan has said U.S. tariffs on Japanese cars and car parts will be eliminated through further talks but no time frame has been set.

The document of the pact written in English said: “Customs duties on automobile and auto parts will be subject to further negotiations with respect to the elimination of customs duties.”

The government also estimated that Japan’s farm production would drop by about 60 billion yen-110 billion yen as tariffs on beef, pork and other food imports will be slashed.

Japan Prime Minister Shinzo Abe has said he had received reassurance from U.S. President Donald Trump that the United States would not impose previously threatened “Section 232” national security tariffs on Japanese car imports.

If the U.S. were to impose 25% tariffs on Japanese auto and auto parts, Japan would pay about 1.9421 trillion yen of custom duties, the estimate showed.

Trump pulled the United States out of the Trans-Pacific Partnership when he took office in 2017, saying the trade pact would rob Americans of jobs and investment.

Previously, the Japanese government estimated that the TPP 12, including the United States, would lift Japan’s GDP by 2.6% and the 11-nation TPP after Washington left would boost the economy by 1.5%.

Reporting by Kaori Kaneko; Editing by Chris Gallagher and Muralikumar Anantharaman