In his presidential campaign last year, U.S. President Donald Trump promised to scrap trade deals that gave unfair advantages to other nations and replace them with new ones that would revitalize the U.S. economy and bring jobs back home.
One of the Trump administration’s first major tests of its confrontational approach to trade will bring Vice President Mike Pence head-to-head with his Japanese counterpart, Taro Aso, the pugnacious deputy prime minister with a habit of speaking his mind.
Pence and Aso meet in Japan next month for the first in a series of talks on economic relations between the world’s largest and third-largest economies.
People who know or have worked under Aso say the 76-year-old, also the finance minister, will push to keep the agenda focused on areas both countries can easily agree on but will be well-armed if the conversation veers into areas of currency policy, a point of division between the long-standing postwar allies.
“He speaks his own words and doesn’t need much help from the bureaucrats when commenting on exchange rates,” said a finance ministry official who has worked under Aso.
His negotiation skills were honed while dealing with the global financial crisis as Japan’s prime minister in 2008 and subsequent Trans-Pacific Partnership talks with the Obama administration, sources say.
The upcoming Japan-U.S. dialogue remains clouded by Trump’s earlier accusations that countries such as China and Japan artificially weaken their currencies to boost exports.
One of Aso’s tactics in pushing back could be to zero in on what he sees as areas of U.S. policy inconsistency, particularly around currencies and monetary policy.
“Aso is a tough negotiator, vigorously pressing his side of the issue. But given his keen sense of humor and extensive experience … he’s able to keep things in perspective,” said a U.S. Treasury Department official with experience negotiating with Aso.
“He doesn’t allow even sharp differences in views to become antagonistic or personally divisive,” the official said.
Aso’s battle with Washington on currency policy dates back to 2008, when Japan’s export-reliant economy was suffering from a spike in the safe-haven yen after Lehman Brothers collapsed under the weight of its huge subprime mortgage loan holdings.
Last month, he accused the U.S. of slashing interest rates following the 2007 subprime mortgage crisis to weaken the dollar and boost the economy.
“Back then, Japan didn’t complain a word,” Aso said in the Diet, noting the country endured the subsequent yen spike that hit exports.
He says this episode has prevented Washington from pushing too hard on arguments the Bank of Japan’s ultra-easy policy is explicitly aimed at weakening the yen.
During TPP negotiations, Aso argued U.S. proposals for punitive tariffs on countries it sees as currency manipulators would contravene G-7 and G-20 protocols prohibiting politicians from interfering in member states’ exchange-rate policies.
These tariffs did not make it into the pact, which the U.S. subsequently exited.
Historically, bilateral trade talks followed U.S. demands for deregulation in Japan’s key industries, such as the auto and insurance sectors in the 1980s and 1990s.
Prime Minister Shinzo Abe’s Cabinet, however, has been forthright in forging economic ties with U.S. counterparts and Aso proposed next month’s U.S. dialogue with Pence, a free trade advocate with limited experience in financial diplomacy.
Japan had hoped to keep contentious issues like autos and agriculture out of the dialogue by proposing an agenda focused on infrastructure investment and energy.
But such hopes were dashed when the U.S. administration presented a statement to the World Trade Organization urging Japan to further open its automobile and agriculture markets.
Japan rejects these demands but conceded it will debate the issue at the economic dialogue. That means Aso, a clay target shooting Olympian, will be primed for action.
But Aso, known for his love of manga, could equally use his charm to engage Pence.
The two met on the sidelines of last month’s Trump-Abe summit in the U.S.
Aso told the Diet that Pence was a “very serious person” but said the two agreed to play a game of golf some time.
Born to a prestigious political family, Aso speaks good English and frequently cracks jokes, even in the Diet, which sometimes leads to gaffes but generally wins fans among politicians and finance ministry subordinates.
His fashion sense — with his collection of luxury French and Italian ties — sets him apart from the usually colorless characters in senior Japanese politics.
He drew eyeballs in 2013 sporting a black hat and a black coat upon arrival in Moscow for a G-20 meeting. People who know him say it was modeled after his grandfather, Shigeru Yoshida, who as postwar prime minister negotiated with occupying U.S. forces to bring Japan’s war-torn economy to prosperity.
Knowing Trump won’t be business as usual, Aso also stresses the importance of agreeing on a solid framework for the dialogue first, before getting into specifics.
The framework for mid-April’s talks will be set so Japan can reach a deal quickly on less contentious issues and spend time on more problematic items like trade, allowing it to buy time if faced with harsh U.S. demands, say government officials with knowledge of the preparations.
“For things that require signing treaties, it’s impossible to reach a quick solution. That’s why you need to build up from things that’s easier to yield results,” Aso said.
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