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Expert: Japan needs to make efforts to maintain the free trade system

  • September 20, 2018
  • , Nikkei , p. 5
  • JMH Translation

Interview with Gakushuin University Prof. Motoshige Ito

By Yui Nakamura


Q: The trade war is rattling the world.


Ito: Since this is a standoff between two major powers, the U.S. and China, this trade friction will be much harder to resolve than in the past. However, free trade is not dead. This simply means that the world’s power map and the development levels of individual countries have been changing with the times, so the world is approaching a period when the free trade rules also need to be revisited. It is overoptimistic and dangerous to think that the free trade system can continue into the future without making any effort.


Free trade has many merits, such as enhancing the economic growth rate through international division of labor or restricting domestic monopolization and control through international competition. It is like the air. You only realize its importance when it’s gone. It would be difficult to restore the system once it is destroyed.


Q: The U.S. is intensifying its imposition of additional tariffs on China.


Ito: There is no doubt that there is room for discussion of Trump’s methods. On the other hand, China has been imposing high tariffs on imports and exporting its products to the U.S. and other countries at low tariffs. China is clearly protectionist in terms of tariffs.


While Chinese companies are able to invest overseas relatively freely, foreign companies are regulated by strict rules when they invest in China. Although this might have been understandable 10 or 20 years ago, the U.S. is now challenging this contradiction.


Q: How should Japan deal with this global trade war?


Ito: We experienced the Japan-U.S. trade friction in the 1980s. At that time, the Japanese auto industry had to accept very strict conditions, but this actually resulted in promoting the development of the industry. Trade talks should be conducted with a vision of three or five years in the future.


Japan took the lead in the TPP 11 and it signed an economic partnership agreement (EPA) with the EU. Foreign countries are now saying that Japan is behaving more independently than before. Amid the intensifying U.S.-China confrontation, Japan needs to play the role of safeguarding the free trade system.

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