US trade deal with Japan
Is the $US550bn investments deal in fact largely made up of loans & loan guarantees? Are the trade deals real commitments for action or statements of intent?
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Answer
Hi Robert,
Like you we are forced to read between the lines on most of the “trade deals”. President Trump declared a “massive” trade and investment agreement with Japan featuring a US$550 billion investment package into key U.S. industries. He claimed the U.S. would receive 90% of profits from the investment, though Japan’s officials later clarified that profits will be shared with relevance to funding arrangements and risk exposure.
The simple answer is yes, the US–Japan $550 billion investment deal is largely made up of loans and loan guarantees. The $550B figure is not a cash transfer or hard investment, but a projection (headline figure) involving structured financing expected to be spread over several years and largely conditional on project approvals and private-sector participation – a lot can happen in a few weeks at the moment, let alone a few years!
In terms of binding or statements of intent of course there’s simple middle ground!
- Binding trade deals are enforceable and require action.
- Statements of intent reflect political goodwill but don’t guarantee outcomes.
The $550 billion U.S.–Japan trade deal announced last month is largely a statement of intent, not a legally binding treaty.
