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Editorial: Stick to the principle of free and fair trade

The United States and Japan have agreed to set up a “new framework for trade talks” and will launch bilateral negotiations. To make a stand against protectionist pressure from the U.S., Japan will need not ties of trust with U.S. President Donald Trump but a solid strategy based on the principles of free trade.  

 

The focus of the summit was whether Abe would be able to avoid bilateral talks that placed Japan at a disadvantage and encourage the United States to return to the Trans-Pacific Partnership (TPP) multilateral trade pact and whether the United States would exempt Japan from the steel and aluminum import restrictions.

 

Even during the summit, though, President Donald Trump released such tweets as “While Japan would like us to go back into TPP, I don’t like the deal for the United States.” “Bilateral deals are far more profitable for America.”

 

It seems that from the start it was impossible for Prime Minister Shinzo Abe to achieve his aims, which included having Japan exempted from the U.S. import restrictions.

 

Bilateral negotiations will now be handled through talks between Economic and Fiscal Policy Minister Toshimitsu Motegi and U.S. Trade Representative (USTR) Robert Lighthizer.

 

With the U.S. midterm elections coming up this autumn, President Trump is anxious, so it is very likely that the U.S. will seek to produce results in reducing the trade deficit by pushing strongly for Japan to open its automobile and agriculture markets. Cutting the trade deficit is something Mr. Trump can use to appeal to his supporters. Depending on how things develop, Prime Minister Abe could very well be placed in a difficult situation in economic diplomacy as well.

 

In contrast to Abe’s stance of putting off issues by emphasizing his ties of trust with the President, both Europe and China have pledged to take countermeasures against the United States. Bilateral negotiations were forced upon Japan at the summit, and this brought into sharp relief both the reality of Japan-U.S. relations — namely, that the two countries cannot be regarded as equals — and the difficulty of Japan’s position.

 

Underneath President Trump’s America-first policy and protectionism lies a major shift in the world order from unipolar dominance by the United States to bipolar dominance by America and China, as witnessed by the competition between them. At the same time, protectionism breaks down the liberal, coordinated, rules-based multilateral trading system of the World Trade Organization (WTO), which America has spearheaded throughout the postwar period.

 

Economic disparities and the destruction of the middle class create fertile ground for protectionism and populism to grow.

 

How will Japan promote income redistribution, for example? Delaying may be a common tactic in negotiations, but Japan needs to have a solid strategy for maintaining the free and fair trade system, keeping this important issue in mind.

 

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