U.S. President Donald Trump’s criticism of the auto trade between Japan and the United States has raised the specter of a replay of the bitter bilateral trade dispute that had supposedly been relegated to ancient 20th century history.
Trump has criticized trade in automobiles between the two countries as “unfair” and indicated his intention to start bilateral talks to reduce the U.S. trade deficit with Japan.
Trump has also signed an executive order to withdraw the United States permanently from the Trans-Pacific Partnership trade agreement, negotiated by 12 Asia-Pacific nations, including Japan and the United States. Trump’s swipe at trade in the automotive industry came amid growing signs that he will focus on bilateral deals under his trade agenda.
Things have changed dramatically since the 1980s and 1990s, when Tokyo and Washington were locked in a high-stakes auto trade row.
Japanese carmakers have greatly expanded their production in the United States, creating many jobs in the country. Japan has also eliminated its tariffs on auto imports while America still imposes a 2.5-percent import duty on cars from other countries.
Trump’s remarks reflect such outdated views about the issue that it is difficult to believe that he actually spoke the words.
The negative effects of Trump’s trade bilateralism will go far beyond economic ties between Japan and the United States.
If the United States, the world’s largest economy, adopts a protectionist policy as a means to create jobs at home quickly and uses its powerful economic muscle to pressure its trade partners into making concessions, the established rules to ensure fair trade will be distorted. That could impede international trade and lead to tit for tats that reduce economic activities.
Such a situation would also hurt U.S. industries by crimping their exports.
It is the role of Japan, the world’s third largest economy, to help the Trump administration realize that it is reasonable and in America’s best interest to promote free trade through multilateral cooperation.
Both the public and private sectors need to use their respective communications channels to make this case to the Trump administration in the weeks leading up to the meeting between Trump and Prime Minister Shinzo Abe, expected to soon be held.
It is also crucial to make efforts to keep multilateral trade talks alive.
With the World Trade Organization considered dysfunctional, the most immediate question for the Japanese government is what to do with the TPP.
Abe has repeatedly pledged to make tenacious efforts to convince Trump of the benefits and importance of the trade agreement.
Clearly, Abe doesn’t want Japan to be part of a multilateral trade pact not involving the United States, its most important ally. But the grim fact is that there is no prospect for the TPP coming into force with Washington as a party to the agreement.
Since the other TPP partners are keen to promote multilateral free trade, Tokyo needs to maintain solid cooperation with them.
As part of its efforts to maintain cooperation among the TPP participants, the Abe government should at least hold talks over the proposal floated by some that the accord should go into effect even without U.S. participation.
Being by far the largest economy among the remaining parties, Japan is the only country that can put such talks into motion.
Japan also has a significant interest in pushing forward its talks over an economic partnership agreement with the European Union, which are now in the final stage, and in supporting the Regional Comprehensive Economic Partnership, a broad East Asian free trade framework involving China, India and Southeast Asian nations.
Japan should take the leadership in both direct and indirect international efforts to make the Trump administration realize the importance of multilateral trade talks.