What kind of economic relationship should Japan create with the United States under the Trump administration? The Japan-U.S. Economic Dialogue will map out that process, but the first meeting has brought into relief the deep chasm between the two countries’ perspectives on trade.
Deputy Prime Minister Taro Aso emphasized multilateral frameworks, saying, “It is critical that Japan and the U.S. spearhead the development of regional trade rules for the Asia-Pacific.” In contrast, U.S. Vice President Mike Pence said, “Bilateral negotiations are in the national interest of the United States.” During the meeting, Aso explained the significance of the Trans-Pacific Partnership (TPP) trade pact. At the [press] conference, Pence declared flatly, “The TPP is a thing of the past for the United States.”
Backed by the world’s mightiest economy and military, the Trump administration’s “America First” policy of pursuing U.S. interests through bilateral negotiations appears unshaken.
In the 1980s, the United States set numerical targets and called for market access, seeking equality of outcome. If the U.S. is expecting trade negotiations like those, Japan will have to call the U.S. on it. Trade balances are not determined by trade policy but are influenced by the economic conditions and industrial structures in the countries themselves. “Surplus and deficit” do not equate to “win and lose.”
The Trump administration is becoming more and more protectionist. The president signed a pair of executive orders focused on reducing the trade deficit and has indicated his belief that the United States need not be bound by international rules if they undermine American interests. The United States prevailed in having the standard expression “resisting protectionism” dropped from a joint statement of a recent international conference.
Promoting free trade can benefit consumers in each country and expand the economic pie. Protectionism is not advisable. Japan’s highest priority is to insist the United States uphold this basic principle.
How can we refocus the attention of this superpower from bilateral negotiations to multilateral frameworks? The Japan-U.S. Economic Dialogue meeting showed the difficulty of doing that. The reality is that industrial supply chains – whether in the United States, Canada, or Mexico or in Northeast Asia or Southeast Asia – span a number of countries. Insisting on a bilateral approach could sever such ties.
The United States is considering negotiating a free trade agreement (FTA) with Japan; tough times are expected. The economic dialogue, however, will discuss cooperation not just in trade but also in energy, macroeconomic policy, and infrastructure investment.
To forge a relationship in which both countries will mutually benefit from the overall economic situation, Tokyo has no choice but to calmly and with patience hold conversations with U.S.