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Alerts and Updates

U.S.-Japan Trade Agreement Enters into Effect January 1, 2020

December 31, 2019

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As was true under the NAFTA and its successor, the USMCA, the tariff shift for nonoriginating materials must be met.

With the implementation of the U.S.-Japan Trade Agreement on January 1, 2020, the shift from multilateral to bilateral and regional agreements such as the U.S.-Mexico-Canada deal (USMCA) appears to be the template for future trade initiatives.

In order to receive the benefits of the U.S.-Japan agreement, a good must be “originating” and meet all other requirements as set forth in the agreement and the statutory and regulatory provisions applicable.

Annex II of the agreement contains the rules of origin used to determine if a good qualifies for preferential treatment under the agreement. In other words, does the good “originate” as a product of Japan or of the U.S.?

As was true under the NAFTA and its successor, the USMCA, the tariff shift for nonoriginating materials must be met. In addition, where required, regional value thresholds must be satisfied. A new General Note 36 will be added to the Harmonized Tariff Schedules of the United States (HTSUS) and will include the requirements of the agreement.

Generally, to claim preferential tariff treatment under the agreement, the following requirements must be met.

  1. Country of origin must be Japan.
  2. Country of export must be Japan.
  3. Once programmed in the Customs electronic system (ACE), the special program indicator “JP” must be placed before the eligible tariff number to make the claim.
  4. Please note that claims for preferential treatment under the agreement are not exempt from the merchandise processing fee (MPF).

More details regarding the implementation of the agreement will be provided by Customs and Border Protection and in regulations to be published in the Federal Register.

For More Information

If you would like further information about this Alert, please contact Brian S. Goldstein, J. Manly Parks, Geoffrey M. Goodale, Nathan B. Reeder, any of the attorneys in our International Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.