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U.S. exit from TPP forces Japan to shift track

With the signing on Monday of an executive order to withdraw the United States from the Trans-Pacific Partnership free trade pact, which stipulates fair trade rules, U.S. President Donald Trump clearly demonstrated his intention to shift U.S. economic policies in a more protectionist direction.

 

The administration of Prime Minister Shinzo Abe has been aiming to boost Japan’s economy using an Abenomics economic policy package with the TPP as a major pillar. With no hope in sight of the TPP taking effect, the Abe administration will be forced to rethink its economic policies.

 

“They [Japan] sell cars into us, and they come in like by the hundreds of thousands on the biggest ships I’ve ever seen,” Trump said at a meeting with business leaders at the White House.

 

“It’s not fair,” the president added.

 

However, Japan has already abolished automobile tariffs so that when U.S. vehicles are imported and sold in Japan no duties are imposed. On the other hand, the United States imposes import duties of 2.5 percent on Japanese vehicles.

 

The U.S. auto industry has been frustrated over Japan’s severe regulations on fuel efficiency and automobile safety.

 

On this point, a supplementary document attached to the TPP states that some auto inspection data collected in the United States can be brought to Japan, giving due consideration to the U.S. auto industry’s expansion of sales in the Japanese market.

 

Economy, Trade and Industry Minister Hiroshige Seko argued that Trump’s assertions are groundless, saying, “In non-tariff aspects as well, Japan does not treat [U.S. vehicles] with discrimination.

 

“We will look for opportunities to thoroughly explain this [to the U.S. government],” the economic minister added, making clear his intention to tenaciously negotiate with the U.S.

 

The new U.S. president has stated he will shift the country’s trade policies toward ones based on bilateral trade negotiations. With his “America first” policy and the vast U.S. market, Trump is expected to try to obtain beneficial conditions for the United States from each trading partner country through bilateral negotiations.

 

Under bilateral negotiations, it will be difficult to reach high-level agreements such as the massive cuts to and even the abolition of tariffs agreed to under the TPP framework.

 

The Japanese government has estimated the economic effect of the TPP on the domestic economy to be up to ¥14 trillion and situated the TPP as a main pillar of its growth strategy. On visits to Vietnam and Australia this month, Abe confirmed with the leaders of those countries a policy of putting the TPP into effect at an early date.

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