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Editorial: No compromise possible in principles of free trade with U.S.

Japan and the United States recently held a first round of bilateral trade talks under an agreement reached between the leaders of the two countries last September.

 

The talks are aimed at addressing issues concerning digital trade, including e-commerce, as well as trade in goods like agricultural products and automobiles.

 

Toshimitsu Motegi, the minister in charge of Trans-Pacific Partnership and Japan-U.S. trade negotiations who represented Tokyo in the two-day discussions held in Washington, said the two sides share a common desire to “produce good results quickly.”

 

U.S. Trade Representative Robert Lighthizer’s office said in a statement that the two countries “reaffirmed their shared goal of achieving substantive results on trade.”

 

But the statement also said the United States “raised its very large trade deficit with Japan,” which hit $67.6 billion (7.6 trillion yen) in 2018.

 

As negotiations shift into higher gear in coming months, highlighting areas where the interests of the two countries are in conflict, Washington will no doubt make a wide range of tough demands on Tokyo.

 

The Japanese government needs to continue stressing that the principles of free and fair trade must be upheld.

 

One key issue will be Japan’s auto exports to the United States, which account for a big chunk of the trade imbalance between the two countries.

 

U.S. President Donald Trump is considering imposing high additional tariffs on car imports, citing security reasons.

 

The joint statement that Trump and Prime Minister Shinzo Abe issued after their summit in September said the two countries will “refrain from taking measures against the spirit of this joint statement during the process of these consultations.”

 

Motegi claims that the U.S. government has confirmed it will not impose additional tariffs on imports from Japan during the talks.

 

But the Trump administration has used the threat of stiff new tariffs to put pressure on its trade partners and managed to insert a provision that could lead to restrictions on import volumes in trade agreements with Canada and Mexico.

 

Japan needs to keep urging the Trump administration to restrain from taking further actions that violate international trade rules.

 

As the TPP multilateral trade agreement among Pacific-Rim countries has come into force without the United States, which has withdrawn from the pact, American farm exports, such as beef and pork, are facing competitive disadvantages in the Japanese market due to higher tariffs than the reduced rates on rivals like Australian products.

 

Tokyo could use this situation as leverage at the negotiation table to strengthen its position that it cannot go further than the tariff cuts on farm products it agreed to for the TPP and will not accept any unreasonable demand concerning auto trade.

 

Initially, Japan sought to persuade the United States to return to the TPP to avoid such bilateral talks which tend to work in favor of a bigger economic power.

 

But Tokyo has been forced to make a concession to Washington and agree to the bilateral talks under the threat of additional tariffs on Japanese car exports.

 

Since the Abe-Trump summit last year, the Japanese government has been stressing that the negotiations will be focused on tariffs on goods, saying the goal is a trade agreement on goods, or TAG. Abe has insisted that it will be “completely different” from a comprehensive free trade agreement (FTA).

 

In reality, however, the two sides have started discussing issues concerning digital trade. As they progress, the talks could also tackle such areas as trade in services and investment.

 

The government should make clear to the public exactly which areas will and could be covered by the bilateral trade talks with the United States.

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