Prime Minister Shinzo Abe agreed to start new talks to conclude a Japan-U.S. Trade Agreement on Goods (TAG) at his summit meeting with President Donald Trump.
The talks will discuss the U.S.’s demand for the liberalization of the market for agricultural products and autos. It was also agreed that the U.S. will not invoke its planned additional tariffs on imported cars while the talks are going on.
With the U.S. administration insisting on bilateral agreements, it is unlikely that the U.S. will return to the TPP for the time being. Amid increasing U.S. pressure on Japan, it was inevitable to consent to hold negotiations with the U.S. limited to trade in goods in order to resolve the situation.
The question is consistency with the TPP. If Japan heeds the U.S.’s unreasonable demands and reinforces managed trade methods, this will leave problems for the future.
Prime Minister Abe declared at the United Nations that strengthening the free trade system is Japan’s mission. If Japan is unable to stand by this position, it will be at risk of losing the credibility it built through the TPP negotiation process.
It is a matter of course that the U.S. should put off additional tariffs on Japanese cars for the time being. Using this as a means of intimidation will preclude proper negotiations. It is necessary to sternly remind the U.S. that it should not go back on this issue.
The U.S. favors bilateral agreements because it thinks that it is easier to include terms in line with its national interest this way. Although the new talks will not be about the comprehensive free trade agreement (FTA) the U.S. had originally intended, these will still be bilateral tariff talks that Japan had tried to avoid. Japan needs to remain vigilant against the U.S.’s hard-line posture.
It is feared that the U.S. may demand numerical restrictions in auto trade and other areas. Government-controlled numerical targets are even more protectionist than import restriction through tariffs. Japan must not accept such a demand.
On the other hand, it is of great significance that the joint statement issued after the bilateral summit states that with regard to agricultural products, “the U.S. shall respect Japan’s position that it will not agree to tariff reduction beyond the level under the TPP agreement.”
The U.S. will not be able to enjoy the benefits of exporting to Japan because it withdrew from the TPP. Japan would be getting its priorities wrong if the new agreement with the U.S. puts the TPP 11 at a disadvantage. The new agreement should provide only for tariff reduction on par with the TPP, leaving room for the U.S.’s return to the accord in the future.
The joint statement also confirms Japan-U.S. cooperation in dealing with unfair trade practices, with China in mind. If the U.S. intends to stop China’s pursuit of hegemony, it should reinforce the encirclement of China by cooperating with Japan and Europe. It is important to persevere in making a case for this.