Questions for Japan About Its Trade/Investment Deals with the Trump Administration
One of the many useful things that happens at the WTO is the Trade Policy Reviews carried out for each WTO Member. As past of this process, governments can ask each other questions about a wide range of trade and investment issues, and the questions/answers are later made available to the public through the WTO's DocsOnline database.
I had been wondering if this process might provide some new information on the Trump administration's various trade deals, and I've been watching for documents related to the trade policy reviews of governments with whom these deals have been negotiated. Japan's latest review took place at the end of May, and, as I hoped, there were some questions on these issues. Below are the ones I came across that I thought might be of interest to people in relation to the Trump trade deals.
First up were some questions on the details of the U.S.-Japan framework trade deal and its consistency with WTO obligations. On this issue, China asked the following:
During the period under review, Japan reached a trade agreement framework with the United States. When will Japan reduce tariffs for the United States, and will such reductions be implemented on a Most-Favoured-Nation (MFN) basis? When will this framework be notified to the WTO, and will it conflict with Japan's obligations under the WTO?
Japan's reply was:
Under the Agreement between Japan and the United States on July 22, 2025, Japan made no tariff concessions. The Agreement is not legally binding. It is not a regional trade agreement under the WTO Agreement and is not subject to notification.
China later followed up with a question about the nature of the deal as "legally binding" or not:
In its response to the first batch of questions, Japan stated that the framework agreement is not legally binding. Could Japan further clarify the reasons why the agreement is not legally binding? If it carries no legal binding effect, may either party decline to perform its stipulated obligations?
Japan elaborated on the point as follows:
The Agreement between Japan and the United States on July 22, 2025 was not intended to establish legal obligations for either country. Japan intends to steadily implement the Agreement, and will continue to call on the United States to do the same.
Taiwan asked a similar question on the point about consistency with WTO obligations:
Noting the bilateral tariff arrangements between Japan and the United States in 2025, including the application of a baseline 15% reciprocal tariff and preferential treatment under Section 232 measures for certain sectors, could Japan elaborate on how such arrangements are consistent with WTO principles, particularly the most-favoured-nation (MFN) obligation, and how Japan assesses their implications for non-discrimination and predictability in the multilateral trading system?
Japan gave an answer similar to what it said above:
Under the Agreement between Japan and the US on July 22, 2025, Japan made no tariff concessions, and did not commit to implement measures inconsistent with the rules on the market access under the WTO Agreement.
Kazakhstan asked a variation of this question, with some additional aspects thrown in:
Japan's report describes the bilateral tariff agreement concluded with the United States on 22 July 2025, under which a baseline reciprocal tariff rate of 15% applies to Japanese goods. Kazakhstan requests Japan to clarify how this bilateral arrangement is consistent with the Most-Favoured-Nation (MFN) obligation under the WTO Agreement, and what measures Japan is taking to ensure that the agreement does not result in trade diversion to the detriment of other WTO Members, including Central Asian countries exporting comparable goods to the United States market.
Japan's reply focused only on the first part of the question:
Under the Agreement between Japan and the US on July 22, 2025, Japan made no tariff concessions, and did not commit to implement measures inconsistent with the rules on the market access under the WTO Agreement.
Next there were some questions about Japan's market access promises related to automobile regulations and subsidies. For reference here, on the regulations, a White House fact sheet on the U.S.–Japan Strategic Trade and Investment Agreement says: "Longstanding restrictions on U.S. cars and trucks will be lifted, granting U.S. automakers access to the Japanese consumer market; U.S. Automotive standards will be approved in Japan for the first time ever." China asked the following on this issue:
According to the framework trade agreement with the United States, Japan will accept US manufactured passenger vehicles certified under US safety standards without requiring additional domestic testing. Please explain Japan's considerations and grounds for waiving domestic testing requirements on US-manufactured passenger vehicles. Will Japan grant the same exemption treatment to passenger vehicles from other members that meet equivalent safety standards?
Japan's reply was:
The road vehicle safety regulations of Japan apply equally to vehicles imported from all countries without distinction.
The measure has been implemented following an evaluation of the FMVSS and the means by which compliance with such standards is ensured.
And on subsidies, a Joint Statement on the Framework Agreement between the United States and Japan on July 22, 2025, released on September 4, 2025, states that Japan committed to the following: "Providing Clean Energy Vehicle Introduction Promotion Subsidies for American cars." On this issue, China asked:
According to the framework trade agreement with the United States, Japan specifically states that Japan will provide Clean Energy Vehicle Introduction Promotion Subsidies for US manufactured passenger vehicles. Who is eligible for this subsidy, and what are the criteria for receiving it?
Japan replied:
Clean Energy Vehicle Introduction Promotion Subsidies provides financial support to local governments, other organizations (excluding independent administrative agencies), and individuals to cover part of the costs required for introducing clean energy vehicles. As application requirements, the program requires that the vehicle be new and private use, among other conditions.
China followed up by asking:
According to the framework trade agreement with the United States, Japan specifically states that Japan will provide Clean Energy Vehicle Introduction Promotion Subsidies for US manufactured passenger vehicles. Can similar products from other WTO members also receive this subsidy?
Japan then replied:
Only vehicles that are mass-produced and whose specifications or model types have been preapproved by the subsidy implementing organization, based on applications submitted by the manufacturer or equivalent entity, are eligible for Clean Energy Vehicle Introduction Promotion Subsidies Vehicles manufactured in countries other than the United States are also eligible to receive this subsidy.
Next up, there was a historical look at the trade deal signed between Japan and the U.S. during the first Trump administration. Here, China asked:
Could Japan please explain the reasons why the 2020 trade agreement on goods with the United States, together with their related rules of origin, were not notified to the WTO?
Japan replied:
We look forward to notification and discussion, taking into account that the Agreement includes the reference to additional negotiations between the Parties.
Russa also asked about this:
Please clarify whether Japan has already notified the Japan-United States Trade Agreement of December 2019 to the WTO? If this is not the case, please clarify when the missing notification will be provided.
Japan's reply was:
In light of Russia's aggression against Ukraine, Japan does not think it is appropriate to engage with Russia in a business-as-usual manner in the WTO. Therefore, we cannot respond to this question.
And there were questions about the foreign investment commitments Japan recently made to the U.S. in a Memorandum of Understanding. China first asked the following (the question seems to have gotten a little bit garbled in the WTO document, and I'm just quoting it as is):
As the Report by the Secretariat mentioned that "a pledge by Japan to invest up to USD 550 billion into the United States under a dedicated Memorandum of Understanding""The Memorandum is an "administrative understanding" between the two parties and does not create legally binding obligations under domestic or international law. It may be modified or terminated by either party with written notice". Could Japan please explain how Japan consider the implementation of this Memorandum in a new circumstance following the United States Supreme Court ruling in late February 2026?
Japan's reply was:
The Strategic Investment Initiative set forth by the Governments of Japan and the United States contributes to promoting mutual benefits, ensuring economic security, and promoting economic growth between Japan and the United States. Japan intends to steadily implement the Agreement between Japan and the United States, and at the same time, will continue to call on the United States to do the same.
China then followed up with:
As the Report by the Secretariat mentioned that "Investment proposals are selected by the US President (based on recommendations from an Investment Committee chaired by the Secretary of Commerce, with input from a bilateral Consultation Committee.)""Cash flows generated by projects are distributed in two stages. Initially, returns are shared equally, 50% to each party, net of US taxes, until the "Deemed Allocation Amount" is satisfied. Once this threshold is met, distributions shift to a preferential allocation of 90% to the United States and 10% to Japan for all subsequent cash flows.""Japan retains discretion to decline funding, but such decisions trigger consequences: forfeiture of entitlement to distributions under the original allocation formula and application of a revised formula until the United States recovers the shortfall ("Catch-up Amount")". Could Japan please explain how Japan assess the impact of the distribution mechanism on long-term fiscal returns and commercial interests of Japanese investors?
Japan's reply was:
First of all, this description in the Report by the Secretariat is written in the memorandum of understanding (MOU) between the government of Japan and the Government of the United States of America with respect to strategic investments. Regarding funding for each project under the Strategic investment initiative, JBIC (Japan Bank for International Cooperation) will invest and provide loans, and commercial banks will also provide loans guaranteed by NEXI (Nippon Export and Investment Insurance). The MOU also outlines the modality for distributing the available cash flow. Until the aggregate cash flow amounts equal to the principal and the interest funds provided by Japan, 50% to the US and 50% to Japan. This part reflects the fact that loans constitute a significant portion of Japan's funding. For the remaining amount, 90% to the US and 10% to Japan, taking into account various contributions from the US side such as arranging leases for the US federal land, water, and power/energy, as well as facilitating off-take arrangements and expediting regulatory processes. What "long-term fiscal returns" and "commercial interest of Japanese investors" mean seems unclear to us but following the MOU's modality, the principal and the interest funds will be provided appropriately from the available cash flows.
Taiwan also asked about these investment pledges:
With reference to Chapter 5, Section 5.2.2, paragraphs 5.6 and 5.7 of the Japanese report, which state that Japan has committed to promoting USD 550 billion in investment in the United States, with a focus on industries related to economic security, please explain the implications of such outward investment policies for the global investment landscape and the reconfiguration of international supply chains.
Japan replied:
As the paragraph 5.7 of the Japanese report mentions, the purpose of this strategic investment initiative is to build resilient supply chains that benefit both Japan and the US through Japanese investment in the US. Although we are not sure about what 'the reconfiguration of international supply chain' exactly means, we expect these projects under this initiative will strengthen critical supply chains in Japan and the US.
Finally, there were some questions about Japan's promise to buy more U.S. rice. The Joint Statement on the Framework Agreement between the United States and Japan on July 22, 2025 sets out the following commitment: "Expedited implementation of a 75% increase of U.S. rice procurements within the Minimum Access rice scheme." China asked about this as follows:
Whether Japan's unilateral commitment to increase imports of rice from the United States by 75% within the Minimum Access quota violates the GATT principles of Most-Favored-Nation treatment and non-discriminatory treatment for state trading enterprises, thereby reducing export opportunities for rice from other WTO Members to Japan?
Japan replied:
The import of rice under the Minimum Access commitment is conducted through tenders based on the WTO rules, taking into account the needs of domestic consumers, the production and export capacity of exporting countries, and domestic and international supply and demand trends. Import volumes by country are the results of such tenders, and no preferential treatment is given to any specific country.
China also asked:
During the review period, Japan reached a framework trade agreement with the United States, committing to expediting implementation of a 75% increase of US rice procurements within Minimum Access TQs. Could Japan please clarify what is the current quantity of Japan's MA quota allocated to the United States?
Japan replied:
The import of rice under the Minimum Access commitment is conducted through tenders based on the WTO rules, taking into account the needs of domestic consumers, the production and export capacity of exporting countries, and domestic and international supply and demand trends. Import volumes by country are the results of such tenders, and no preferential treatment is given to any specific country.
China also asked:
Japan has committed to increasing rice imports from the United States by 75%. Does this additional volume come from the existing Minimum Access (MA) quota, or has Japan allocated an extra MA quota volume specifically for the United States?
Japan replied:
The import of rice under the Minimum Access commitment is conducted through tenders based on the WTO rules, taking into account the needs of domestic consumers, the production and export capacity of exporting countries, and domestic and international supply and demand trends. Import volumes by country are the results of such tenders; no preferential treatment is given to any specific country, and no extra MA quota volume, has been allocated for the United States.
Another from China:
If Japan's commitment to increase rice imports from the United States by 75% is to be fulfilled within the existing Minimum Access (MA) quota, does that mean the export opportunities for rice from other countries to Japan have been crowded out?
And Japan's reply:
The import of rice under the Minimum Access commitment is conducted through tenders based on the WTO rules, taking into account the needs of domestic consumers, the production and export capacity of exporting countries, and domestic and international supply and demand trends. Import volumes by country are the results of such tenders, and no preferential treatment is given to any specific country. Therefore, export opportunities for rice from any country to Japan have not been crowded out.
One more from China:
The Secretariat report indicates that the import of rice under the Minimum Access commitment is conducted through tenders. Could Japan explain how it ensures that increasing rice imports from the United States by 75% through such procedures will not prejudice the interests of other WTO Members?
Japan's reply:
The import of rice under the Minimum Access commitment is conducted through tenders based on the WTO rules, taking into account the needs of domestic consumers, the production and export capacity of exporting countries, and domestic and international supply and demand trends. Import volumes by country are the results of such tenders, and no preferential treatment is given to any specific country. Therefore, by ensuring export opportunities for any WTO Members, we are not prejudice to their interests.