U.S. companies already established in Japan want the Trump administration to focus more on service-sector trade than on market access for manufacturers, according to the American Chamber of Commerce in Japan.
ACCJ President Sachin N. Shah, who is also the head of Metlife Inc.’s Japanese subsidiary, said that’s the message he and a team of eight CEOs of U.S. companies in Japan recently took to Washington ahead of upcoming bilateral talks between the two nations.
While Shah said in an interview in late May in Tokyo that U.S. firms in Japan welcomed a “more active, healthy and ongoing” economic dialogue between the two nations, he said there was a lot of focus among officials they met in the U.S. on market access.
The priority for U.S. companies in Japan and the chamber is getting issues like “fair and transparent pricing for innovative pharmaceutical products” discussed at any bilateral talks, according to an e-mail from a spokesperson for the chamber. Sustainable health care and retirement provision, cross-border flows of data and energy security are among the other priorities.
Many of these areas were covered in the Trans-Pacific Partnership agreement, a multilateral trade deal that the U.S. initially led but then withdrew from. The chamber was supportive of that deal, which would have created better access to Japan’s agricultural market, covered intellectual property protection and also created new opportunities for U.S. automobile manufacturers in Japan, according to a statement from the U.S. Trade Representative before President Donald Trump pulled the U.S. out of the deal.
Trump says he prefers bilateral trade agreements in which his administration can more directly craft deals that suit U.S. interests. He wants bilateral talks with Japan over a trade imbalance he sees as “very substantial.”
Cars and agriculture are likely to be topics of discussion when economic and fiscal policy minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer meet next month to start those talks.
However, the starting positions of both sides seem distant, with Japan wanting the U.S. to return to the multilateral TPP. And relations have frayed recently after U.S. decisions to impose tariffs on Japan’s steel and aluminum exports, and investigate whether to do the same on cars and car parts.
For many of the companies in the chamber, particularly the Fortune 500 firms, Japan is their second- or third-largest market, according to Shah. For Metlife, it’s the second-largest market, generating 20 to 25 percent of global revenue.
“When you look at where the economic opportunities are, and what our member companies talk through, it’s not going to be in what I’ll call the big manufacturing industries,” he said.
As a result of Japan’s demographics, most of the opportunities in the future will be in services and pharmaceuticals, he said. Health care, technology, financial services and the digital economy should be the focus of U.S. trade strategy with Japan, he said.
Shah said that Metlife’s most successful product in Japan is something that doesn’t even appear in the trade data — a dollar-denominated life insurance product that it sells to consumers. Since its launch in 1999, the product has generated billions dollars of investment into the U.S. economy, money that Metlife uses to invest in farm or commercial loans, and public finance, Shah said.
The story now is very different to what it was in the 1990s, when Japan and the U.S. had numerous spats over trade, according to Eriko Asai, a governor of the chamber who also heads General Electric Co.’s operations in Japan. Asai, who also went to Washington, said that for her company’s infrastructure business, Japan is now “a fundamentally competitive marketplace,” suggesting that the trade issues lie elsewhere.