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Analysis: First step in Japan-U.S. economic talks exposes deep gulf

The administrations of Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump made initial efforts Tuesday to bridge the chasm between them on trade policy, but the road ahead is paved with challenges.


While Deputy Prime Minister Taro Aso and Vice President Mike Pence sounded optimistic as they kicked off a bilateral economic dialogue framework in Tokyo, even the process of getting to that initial meeting has exposed discord in the ways Tokyo and Washington relate to each other.


In a joint press conference, Pence mused that the dialogue could one day grow into formal negotiations toward a bilateral free trade deal, while Aso eschewed any mention of such a result.


“At some point in the future there may be a decision made between our nations to take what we have learned in this dialogue and commence formal negotiations for a free trade agreement, but I’ll leave that to the future,” Pence said.


Bilateral trade agreement talks would put the United States in a stronger negotiating position than Japan, which had been looking forward to trading with the world’s largest economy under the hard-won rules of the Trans-Pacific Partnership until Trump pulled out of the mega-pact upon taking office in January.


“Our goal is simple — we seek trade that is free, and we seek trade that is fair,” Pence said.


For the Trump administration, dead set on quickly reducing the U.S. trade deficit with Japan, fairness would mean opening up Japan’s farm product and automobile markets to U.S. exporters.


That would be political poison for Abe, whose Liberal Democratic Party has long counted on support from industry and agriculture.


Sources close to the matter said the U.S. side demanded in the run-up to the Aso-Pence meeting that a framework for negotiating a bilateral deal be constructed within three months, seeking to get Japan to remove tariffs on key products the Abe administration has vowed to protect.


The mood soured further as U.S. officials rebuffed Japanese attempts to build up a personal relationship between Aso and Pence in the vein of their superiors’ golfing display during Abe’s trip to the United States in February.


A proposal to invite the Pence family to the Asos’ home in Tokyo for a feast of sushi and tempura was dismissed in favor of the Pences’ need for private time, according to government sources.


Infighting in the White House also cast a shadow over the dialogue. A spat between key staff spilled over into the planning of the delegation’s trip to Japan, resulting in Kenneth Juster, Trump’s adviser on international economic policy and an advocate of a bilateral trade deal, staying home.


Washington informed Tokyo just four days prior to the start of the dialogue that Juster would be absent.


“In the middle of a power struggle, the atmosphere ended up being blatantly removed from that of an economic dialogue,” a source close to bilateral ties said.


While the postponement of full-fledged talks toward a bilateral trade deal helps the Abe administration out politically, Pence refused to rule out a future deal.

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