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Editorial: Achieve true “reciprocal” relationship that underpins Japan-U.S. alliance

Prime Minister Shinzo Abe and U.S. President Donald Trump reached a final agreement on a Japan-U.S. trade pact.

 

Japan will either eliminate or reduce tariffs on American agricultural products worth about $7.2 billion (about 780 billion yen). On the other hand, the two countries confirmed that the U.S. will not impose additional tariffs on Japanese cars. Tokyo was apparently able to hold the line on what it was not willing to concede. 

 

It is significant that the United States and Japan did not exacerbate their differences over trade when the global economy is in confusion over the U.S.-China trade friction. The bilateral trade agreement should lead to further expansion of free trade.

 

It should be noted, however, that in some ways the trade pact falls short. We should not overlook the fact that the elimination of tariffs on Japanese automobiles and auto components was postponed. Is the trade agreement truly reciprocal if it doesn’t address Japan’s primary export to the U.S.? There is no guarantee that President Trump will proactively agree to discuss auto tariffs, but even if that is the case, it is necessary for Japan to strongly call for talks. That is essential for further strengthening the Japan-U.S. alliance.

 

It took only six months for the two countries to reach an agreement after they started full-fledged talks in April. Amid the adverse effects of the U.S.-China trade friction on the U.S. economy, President Trump wanted to trumpet negotiation outcomes favorable to the U.S. as soon as possible. Japan wanted to conclude negotiations before the Trump administration demands more from Japan. The two countries’ desires coincided.

 

One of the conditions that Japan proposed to the U.S. was that a bilateral trade deal would not exceed the standards of the Trans-Pacific Partnership (TPP) agreement. As a result, the two countries agreed on beef, pork, wheat and wine in line with TPP standards and did not set a nontariff quota on rice. It is understandable that the Japanese government regards this result as an achievement.

 

Compared with the TPP member countries, the U.S. has been disadvantaged in its export of agricultural products to Japan. President Trump apparently wanted to eliminate farmers’ complaints as soon as possible. However, the hardship of American farmers was a consequence of President Trump’s decision to exit the TPP.

 

If Japan opens its market to the U.S. in line with the TPP standards, the U.S. should have promised to eliminate the 2.5% auto tariff, which the U.S. had agreed to in the TPP before its withdrawal, by setting a timeline for elimination. But that did not happen because Japan puts the highest priority on responding to unreasonable pressures from the U.S.

 

A typical example of such unreasonable pressures is the indication that the U.S. may impose an additional tariff on Japanese cars for security reasons. Also of concern is the U.S.’s possible introduction of a quantitative cap on Japan’s car exports and a clause that links trade with currency. The latest trade agreement leaves the impression that in order to avoid such unreasonable pressures from the U.S., Japan put off the opening of the U.S. auto market, which should have been undertaken together with the opening of the farm sector. 

 

After the new bilateral trade agreement comes into force, the two countries will discuss how to proceed with new negotiations on services and other issues. How can Japan pursue its national interest in the new negotiations? That will be the question once again. 

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