Prime Minister Shinzo Abe and U.S. President Donald Trump met in France on the sidelines of the G7’s Biarritz summit and reached a basic agreement on the Japan-U.S. trade negotiations. They aim to move quickly with the final negotiations on agricultural and industrial goods tariffs and to conclude the agreement at their summit scheduled for the end of September.
The United States has withdrawn from the Trans-Pacific Partnership (TPP) trade pact, and we welcome Japan’s concluding a new trade agreement with America, but Japan cannot yet consider the content of the agreement to be a done deal. The Japanese government must do its utmost until the last minute to have the United States remove the punitive tariffs that are currently in place on Japanese products and head off any U.S. measures to artificially control exports and currency exchange rates.
Japan and the United States have engaged in bilateral trade negotiations based on an agreement reached by their national leaders last September. The details of the basic agreement have not been disclosed, but we anticipate the pact will boost the economies of both nations as it will promote the liberalization of trade in agricultural products and industrial goods.
It is realistic to reduce tariffs on beef and pork imported by Japan to levels equivalent to those in the TPP. President Trump can play up this outcome of the negotiations to the U.S. livestock industry, which is troubled by its declining export competitiveness with America’s withdrawal from the TPP. It will also be easy for Prime Minister Abe to gain the Japanese people’s understanding of this issue.
It is regrettable that the removal of U.S. tariffs on auto imports has been shelved. Japan and the U.S. will apparently continue consultations under a different framework from the one used in the trade negotiations. We would like to see them make further efforts, with sights set on “eliminating auto tariffs in 2025,” which the two nations agreed to in the TPP.
The handling of punitive tariffs against Japan is unclear. For national security reasons, the United States has imposed high tariffs on steel and aluminum imports from Japan and other nations. The U.S. is still mulling whether to apply this to motor vehicles, and a decision is due by mid-November.
It goes without saying that the United States should remove all punitive tariffs it has imposed on Japanese imports. It is uncertain whether Japan has been able to obtain assurances from the U.S. that it will do so.
It is also unclear whether the Trump administration has given up on adopting quantitative restrictions on Japanese auto imports or a currency clause. Washington should not try to control bilateral trade by threatening to impose high tariffs on Japanese vehicles.
President Trump has aggravated the U.S.-China trade war by scrapping several agreements reached with Chinese President Xi Jinping. There is no guarantee that this will not also be the plight of the Japan-U.S. trade negotiations.
There are still many matters to settle before Abe and Trump sign the trade agreement. Careful attention should be paid not to create problems for the future.