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U.S. eyes January trade talks with Japan that will target 'tariff and nontariff barriers'

Kyodo, AFP-JIJI

U.S. President Donald Trump’s administration plans to start negotiations for a bilateral trade agreement with Japan in mid-January, U.S. Trade Representative Robert Lighthizer notified Congress on Tuesday.

In a letter to congressional leaders, Lighthizer suggested the administration will push Japan to “address both tariff and nontariff barriers” in sectors such as automobiles and agriculture, and to “achieve fairer, more balanced trade.”

“We intend to initiate negotiations with Japan as soon as practicable, but no earlier than 90 days from the date of this notice,” he wrote.

Citing the $68.9 billion U.S. trade deficit in goods with Japan in 2017, Lighthizer said, “U.S. exporters in key sectors such as automobiles, agriculture and services have been challenged by multiple tariff and nontariff barriers for decades, leading to chronic U.S. trade imbalances with Japan.”

In a meeting last month in New York, Trump and Prime Minister Shinzo Abe agreed to start negotiations for a trade agreement on goods between the two countries.

The move was a concession by Tokyo, which dropped its earlier insistence on a multilateral approach to trade issues.

Chief Cabinet Secretary Yoshihide Suga said Wednesday in Tokyo that the envisioned negotiations would be “by no means easy.”

“Japan will proceed with the negotiations with the stance that we should aggressively push for what we want and protect what we need to, from the perspective of our national interest,” the top government spokesman told a news conference.

Senior U.S. officials have thrown hardballs even before the start of the trade talks, with Agriculture Secretary Sonny Perdue indicating the United States will push Japan to reduce tariffs on farm products beyond levels agreed to under a free trade agreement between Japan and the European Union.

Perdue’s call for better terms in a trade deal with Japan than the agreement between Tokyo and Brussels came despite the apparent understanding between Trump and Abe that Washington would not demand deeper farm tariff cuts than levels Japan has agreed to in other trade pacts, including in the 11-member Trans-Pacific Partnership.

U.S. Vice President Mike Pence has described the prospective deal with Japan as a “free trade agreement,” contradicting Tokyo’s assertion that the bilateral accord sought by the two governments will not be as comprehensive as a free trade accord.

The two governments are arranging a meeting in Japan between Pence and Deputy Prime Minister Taro Aso in mid-November to pave the way for the upcoming trade negotiations involving Lighthizer and economic revitalization minister Toshimitsu Motegi.

Also on Tuesday, Lighthizer notified Congress that the administration intends to initiate negotiations for a trade agreement with the European Union in mid-January, and for a separate pact with Britain “as soon as it is ready after it exits from the European Union on March 29, 2019.”

“We are committed to concluding these negotiations with timely and substantive results for American workers, farmers, ranchers and businesses,” the USTR said in a statement.

Trump has been aggressive with U.S. trading partners, using tariffs and threats in an effort to boost American exports and curb the long-standing deficit in merchandise trade, despite warnings from many lawmakers and the International Monetary Fund.

In May, the U.S. president had ordered the Commerce Department to investigate the possibility of imposing tariffs of up to 25 percent on foreign autos and auto parts, a prospect that alarmed the industry and would have serious repercussions for Japan and Europe.

“We need to work together to de-escalate and resolve the current trade disputes,” IMF chief Christine Lagarde said at an IMF and World Bank gathering in Bali, Indonesia, last week.

Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies including the European Union.

More tariffs and their countermeasures “could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability,” the fund warned.

The new talks, if successful, would address trade with Europe and Japan but leave the tougher challenge of China, with which the U.S. had a deficit of $376 billion in 2017, excluding services, out of a total worldwide goods deficit of $832 billion.

Tensions with Brussels relaxed in late July when Trump and European Commission President Jean-Claude Juncker vowed to work together to eliminate tariffs, trade barriers and industrial subsidies — excluding the auto sector.

A working group led by Lighthizer and European Trade Commissioner Cecilia Malmstrom has been tasked to work on the feasibility and contours of such an agreement.

But both sides have recently indicated they are far from resolving their differences.

The proposed Transatlantic Trade and Investment Partnership has been at a standstill since Trump came to office, with European countries especially fearful of U.S. imports of beef raised with the use of growth hormones and genetically modified organisms.

Initial negotiations took place between Lighthizer and Motegi in August.

But Tokyo is still seeking to bring the U.S. into the fold of the Trans-Pacific Partnership — which Trump earlier pulled out from.

The U.S. trade deficit ballooned in August to its highest level in six months, according to government figures that showed American consumers snapped up more imported cars and mobile phones.

The total U.S. trade deficit rose 6.4 percent over July to $53.2 billion, overshooting analyst forecasts.

Despite Trump’s efforts to attack the deficit, so far this year it has risen 8.6 percent over the same period in 2017.

The gap in goods trade with China rose to $38.6 billion for August and $8.7 billion with Mexico — both the highest monthly totals ever.

The August figures suggested retaliatory tariffs imposed by China continued to whipsaw American farmers, whose rural counties Trump’s Republican Party traditionally counts on for political support.