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U.S. won't seek cap on car exports from Japan in trade deal despite report, Tokyo's negotiator says

Kyodo

Japan’s top trade negotiator said Friday he has been assured the United States will not ask Japan to cap its automobile exports as part of a bilateral trade deal.

Toshimitsu Motegi, minister for economic and fiscal policy, said that he had spoken with U.S. Trade Representative Robert Lighthizer following a report by Bloomberg News that U.S. President Donald Trump is set to demand that Japan and the European Union “limit or restrict” their auto imports into the United States.

“Japan has maintained that it is against measures that distort fair and open trade practices,” Motegi told a news conference.

“Of course, that includes restrictions on exports — in other words, volume caps. (Lighthizer) confirmed that the United States will not seek such measures,” he said.

The exclusion of an auto cap would be a relief for Japanese automakers, which have come under pressure as Trump presses for a reduction in the U.S. trade deficit with Japan.

Bloomberg reported Wednesday that Trump will sign an executive order within the week giving Japan and the European Union 180 days to agree to reduce their exports of automobiles and car parts in return for the United States delaying new auto tariffs that are set to take effect Saturday.

Trump is scheduled to visit Japan starting May 25 with an itinerary that will include talks with Prime Minister Shinzo Abe.

Motegi said there are no concrete plans to hold working-level talks on a bilateral trade deal ahead of Trump’s trip.

But a person familiar with the negotiations said Lighthizer may instead accompany Trump to meet with Motegi.

Japan has struck an agreement with the United States aimed at not escalating trade tensions. Chief Cabinet Secretary Yoshihide Suga said Thursday that when Japan and the U.S. agreed last year to open bilateral trade talks, the U.S. pledged not to impose auto tariffs while talks were under way.

In February, the U.S. Commerce Department submitted its Section 232 national security report to the White House. The agency was investigating whether imports harmed U.S. national security by weakening American automakers’ ability to invest in future technologies. The Commerce Department’s specific recommendations have not been revealed.

“Prime Minister Abe confirmed directly with President Trump that while trade talks are going on no actions will be taken against the spirit of the joint statement, and additional tariffs will not be imposed under Section 232 on cars or car parts,” Suga said.

The U.S. imported $191.7 billion in passenger vehicles and light trucks in 2018 with more than $90 billion of those imports coming from Canada and Mexico, which are duty-free under the three-way trade deal that replaced NAFTA.

Passenger cars are now subject to a 2.5 percent U.S. tariff but Trump has threatened to raise that to 25 percent, arguing that the EU and other countries have higher barriers to U.S. auto exports.

Information from Bloomberg and Reuters added