Business / Economy

China to seek Japan’s cooperation against U.S. tariffs, sources say

'Ulterior motive' of imperiling alliance suspected; Abe likely to push Trump on issue at Florida summit

Kyodo, Reuters

China plans to seek Japan’s cooperation in tackling U.S. restrictions on steel imports at high-level economic talks in Tokyo on Monday, according to sources close to bilateral relations.

Earlier this month, Chinese diplomats told their Japanese counterparts that they wanted to put U.S. steel tariffs on the agenda for the talks and discuss what the two countries could do next together, the sources said Friday.

Japan is reluctant to get on the wrong side of the Trump administration due to the importance of maintaining the Japan-U.S. security alliance, they said.

China and Japan will resume an economic dialogue after a hiatus of more than seven years, the latest sign of a thaw in relations.

The tariff issue may also be high on the agenda when Chinese Premier Li Keqiang visits Japan in May for a long-delayed trilateral summit with Prime Minister Shinzo Abe and South Korean President Moon Jae-in, the sources said.

Although Japan has its own worries about the way China conducts trade, it has found itself, alongside China and several other countries, on a list of nations subject to increased tariffs on steel and aluminum products that U.S. President Donald Trump’s administration rolled out last month.

Other U.S. allies, such as South Korea, have been given exemptions.

Abe is scheduled to meet Trump in the United States in the coming week and is expected to ask Trump to exempt Japan from the tariffs.

Chinese Foreign Minister Wang Yi, who will chair his country’s delegation to Monday’s talks, is expected to raise concerns about a protectionist streak in the Trump administration and call for Japan and China to coordinate in promoting free trade, the sources said.

But a Japanese government source expressed wariness, saying China “likely has an ulterior motive — to win Japan over and weaken” the Japan-U.S. alliance.

Foreign Minister Taro Kono, who will head the Japanese side, plans to explain Japan’s position to uphold the multilateral international trade system centering on the World Trade Organization.

At the summit with Trump, Abe will propose setting up a new framework to discuss trade issues with the United States, the Nikkei newspaper reported Saturday, in hope of persuading it to rejoin the Trans-Pacific Partnership.

But the move could backfire, as Trump could demand renegotiating terms for the TPP or talks for a bilateral free trade agreement — outcomes Japan wants to avoid.

Trump unexpectedly indicated on Thursday the United States might rejoin the landmark TPP, but only if it offered “substantially better” terms than those provided after previous negotiations.

Abe will make the proposal when he meets Trump at Mar-a-Lago, the president’s Florida resort, on Tuesday and Wednesday, the Nikkei said.

Minister of Economy Trade and Industry Toshimitsu Motegi is likely to lead the Japanese delegation, with his counterpart likely to be U.S. Trade Representative Robert Lighthizer, the paper said, without citing sources.

The framework will be separate from a bilateral economic dialogue that was set up by Abe and Trump in 2017 and is led by their deputies. It discusses issues including trade, infrastructure and technical aid.

The dialogue had so far yielded little, with some analysts saying Japan has used it to broaden the agenda and diffuse direct U.S. pressure for a two-way free trade agreement.

A senior government official did not confirm the media report, but said Abe wanted Motegi to accompany him to the U.S. to address trade issues, though this would depend on the situation in the Diet, where the government faces criticism over scandals involving suspected cronyism linked to Abe.

Japanese officials are bracing for Trump to get tough in trade talks at the summit and are particularly anxious that he could target Abe’s weak-yen policies.

Trump tweeted late on Thursday that the United States was working to make a deal with Japan, “who has hit us hard on trade for years!”

In a currency report on Friday, the Trump administration again refrained from naming any major trading partners as currency manipulators but kept Japan on its monitoring list.

Japan, whose export-reliant economy has benefited greatly from global free trade, has long upheld a multilateral framework and has called on Trump to rejoin the TPP.

But it is wary of renegotiating terms because that would mean upending a pact that was forged by 12 nations but went ahead without the United States after Trump withdrew from the TPP in one of his first acts as president.

Tokyo is also cautious about opening a bilateral free trade agreement with Washington for fear of being pressured to open up politically sensitive markets such as farming and automobiles.