Business / Economy

Japan and U.S. to focus on auto and farm market access in first round of trade talks

Kyodo

Japan and the United States will hold the first round of new ministerial trade talks Thursday in Washington, with the host likely to push Tokyo to further open its automobile and agriculture markets to reduce the chronic U.S. trade deficit.

The talks come as U.S. President Donald Trump threatens to impose additional tariffs of up to 25 percent on imported cars and parts. If he follows through, the new duties would significantly impact major car exporters such as Japan.

During the talks, which are expected to run through Friday, U.S. Trade Representative Robert Lighthizer is likely to press Toshimitsu Motegi, the economic revitalization minister, to reduce Japanese tariffs on agricultural imports such as beef and soybeans, and remove nontariff barriers on automobile imports, to extract concessions ahead of the U.S. midterm elections in November.

Lighthizer is also expected to urge Motegi to start negotiations on a bilateral free trade agreement.

At a Senate hearing late last month, Lighthizer said, “We have had a chronic trade deficit with Japan and we have had, in that case, what we consider to be unfair barriers to U.S. exports in a number of areas.”

The USTR singled out beef exports as an area of concern.

The U.S. goods trade deficit with Japan totaled $68.85 billion in 2017, the third-largest among countries with which the United States generated a trade deficit, according to Commerce Department data.

In the July 26 hearing at the Appropriations Committee, Lighthizer reiterated his eagerness to start talks on a U.S.-Japan FTA, something Tokyo would like to avoid as its preference lies with the Trans-Pacific Partnership agreement, an 11-member regional trade pact from which Trump withdrew last year.

“We ought to be negotiating an FTA with Japan,” he said.

Prime Minister Shinzo Abe and other Japanese officials have said they believe the TPP is the best trade deal for Tokyo and Washington. If the U.S. rejoins the TPP, it could, for example, reduce Japan’s 38.5 percent tariff on fresh and frozen beef to 9 percent over 16 years.

In line with an agreement Abe and Trump during reached their April summit in Florida, Motegi and Lighthizer are tasked with leading new consultations on trade and investment toward a “free, fair and reciprocal” trade deal.