Business | ANALYSIS

Tokyo and Washington finally set to kick off trade talks as American farmers fume over poor Japan access

by Reiji Yoshida

Staff Writer

This week, negotiators from Japan and the United States will meet in Washington to address something that U.S. President Donald Trump considers to be long overdue: trade negotiations to open the Japanese market to more American goods.

Since the 1980s, Trump has argued that Japan greatly benefits from what he says are unfair trade deals and he vocally pledged to start trade talks with Japan during his 2016 presidential campaign.

Prime Minister Shinzo Abe and Trump met in New York in September and agreed to launch talks on a free trade pact; the negotiations were expected to start as early as January.

But the launch has been delayed by the U.S. government shutdown and Washington’s ongoing trade negotiations with Beijing.

On Monday and Tuesday, economic and fiscal policy minister Toshimitsu Motegi is finally set to meet with U.S. Trade Representative Robert Lighthizer in Washington to kick off talks on a deal.

In the first round, Motegi and Lighthizer are likely to discuss which areas they want to change in general, rather than focus on specifics, a senior Foreign Ministry official said recently.

“I don’t think (the two countries) are ready to organize a specific agenda. The two will first decide the scope of the talks,” the official said, speaking on the condition of anonymity.

Takahide Kiuchi, executive economist at Nomura Research Institute, said Japan probably arranged the Motegi-Lighthizer meeting ahead of Trump’s planned visit to Japan next month so Abe and Trump won’t directly clash over trade when the summit takes place.

Trump is reportedly scheduled to visit Japan from May 26 to 28.

“If you want to avoid a situation where Trump might suddenly and strongly start criticizing Japan over trade issues, you need to persuade Trump to leave the matter to ministerial-level talks that have been already launched,” Kiuchi wrote in an analysis published Thursday on NRI’s website.

“This tactic is similar to the one Japan adopted in its previous economic dialogue to buy time. At that time, (Japan) had Deputy Prime Minister (Taro) Aso and U.S. Vice President (Mike) Pence discuss trade issues excluding Trump,” he wrote.

In the first round, Japan is likely to try to limit the scope of the negotiations to trade in goods, while the U.S. will try to expand that to services, such as those related to the telecoms, financial and intellectual property industries, according to Kiuchi.

Washington is also strongly demanding the removal of what U.S. officials call “nontariff barriers” in Japan, Kiuchi said.

In the meantime, the Foreign Ministry official said U.S. trade officials have felt pressured to take a tough stance against Japan, given strong demands from U.S. lobby groups in the farm sector, particularly producers of pork and beef.

“U.S. farmers have been very frustrated, and it’s clear if you look at their press statements,” the official said.

Ironically, industry sources say it was Trump himself who put American farmers at a huge disadvantage in regards to the Japanese market.

In January 2017, Trump, who was apparently grandstanding to emphasize his own trade initiatives, declared he would withdraw the U.S. from the Trans-Pacific Partnership agreement, a Pacific trade pact that would have greatly lowered Japanese tariffs on agricultural products.

For example, under the revised TPP, which was renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the U.S. left it, Japan’s tariff on beef for member countries is set to drop to 9 percent from 38.5 percent in 16 years.

Japan recently struck a similar deal with the European Union that locked American farmers out of favorable trade conditions. That FTA took effect on Feb. 1.

“U.S. pork producers are losing market share in Japan to international competitors that have recently negotiated more favorable trade terms in our most valuable market,” said David Herring, president of the National Pork Producers Council, which represents 42 affiliated state associations of the U.S. pork industry, in a press statement issued April 1.

“Six countries — Canada, Australia, Mexico, New Zealand, Singapore and Vietnam — have implemented the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and gained more favorable access to Japan,” he said.

In the statement, the NPPC cited an estimate from a U.S. economist that said American pork will see exports to Japan grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years if the U.S. quickly gains access on a par with its international competitors.

The same estimate said that U.S. pork shipments to Japan will drop to $349 million if a trade deal is not quickly reached.

“The NPPC welcomed reports that the United States and Japan will commence trade negotiations and urged the Trump administration to expeditiously complete and deliver for ratification to Congress a trade deal that puts U.S. pork producers back on a level playing field in Japan,” the statement read.

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