Business leaders on Tuesday expressed hope that Prime Minister Shinzo Abe’s new Cabinet will focus on trade talks with the United States to ensure that their competitiveness and growth will be maintained.
Economic circles welcomed the expected continuation of government policies, as key economic ministers were retained in the new Cabinet, but called for further steps on fiscal consolidation as the state budget plan for fiscal 2019 may top ¥100 trillion ($880 billion) for the first time due to rising social security costs and defense spending.
“As there have been protectionist moves by some countries, the uncertain outlook for the auto industry, whose operations are global, continues,” said Akio Toyoda, chairman of the Japan Automobile Manufacturers Association, who is also president of Toyota Motor Corp.
“We hope that the Japanese government will continue to push for a framework of free and fair trade,” said Toyoda in a statement, following an agreement between Abe and U.S. President Donald Trump last week to start negotiations for a bilateral trade agreement, including in the auto and agriculture sectors.
Abe said he confirmed with Trump that Japan will be exempted from the potential imposition of tariffs on the imports of cars and auto parts as long as trade negotiations are underway, a source of relief for the auto industry for the time being.
“One of the important issues will be the Japanese government’s response” to a Japan-U.S. agreement, said Kuniharu Nakamura, chairman of the Japan Foreign Trade Council. “We hope the Japanese government will continue to exert leadership to strengthen and maintain an open and free international economic order based on fair rules.”
Hiroaki Nakanishi, chairman of the Japan Business Federation, also known as Keidanren, called the new Cabinet lineup “stable.”
Speaking to reporters, Nakanishi urged the government to “absolutely” make good on its plan to raise the consumption tax in October next year to 10 percent from the current 8 percent. Abe has postponed the hike from the initial plan of April 2017.
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, echoed that view on the consumption tax and called for more efforts to implement preventive steps to mitigate damage from natural disasters, reconstruct disaster-hit areas and carry out social security reforms.
In a Cabinet reshuffle Tuesday, Abe retained six key ministers of his 19 Cabinet members, including Deputy Prime Minister Taro Aso, who doubles as finance minister, Economy, Trade and Industry Minister Hiroshige Seko and Economic Revitalization Minister Toshimitsu Motegi.