Tokyo cautious as Trump touts progress on bilateral trade pact

Reuters, AP, Kyodo

U.S. President Donald Trump said Washington has struck trade agreements with Tokyo that could be implemented without congressional approval but stopped short of assuring Japan that new tariffs would not be slapped on vital auto exports.

Officials in Japan appeared wary over the prospects for a trade deal after Trump said he was prepared to sign a pact soon.

The top government spokesman, Chief Cabinet Secretary Yoshihide Suga, said Tuesday that the two sides are still finalizing details after reaching a basic agreement in late August on farm products, digital trade and other industries.

Suga said Trump and Prime Minister Shinzo Abe are considering signing a deal in late September when they attend the U.N. General Assembly in New York.

“We are accelerating the work that still remains,” he said. “But I decline to comment further because we have not reached a formal agreement.”

In a letter to Congress released by the White House on Monday, Trump said that he intends to enter into the agreements “in the coming weeks” and was notifying lawmakers that the tariff deal would be made under a trade law provision allowing the president to make reciprocal tariff reductions by proclamation.

“In addition, I also will be entering into an Executive Agreement with Japan regarding digital trade,” Trump said in the letter.

A spokesman for U.S. Trade Representative Robert Lighthizer could not immediately be reached for comment on the letter and the trade deals.

Neither agreement would require a vote in Congress under the so-called fast-track approval process. The Trump administration last year notified Congress that it would pursue negotiations with Japan under this method.

Trump’s announcement left unclear whether he has agreed not to impose threatened national security tariffs on Japanese vehicles and auto parts, a critical issue for Tokyo.

Avoiding the “Section 232” tariffs of up to 25 percent was a major motivating factor for Tokyo in negotiating with Washington on trade.

“At the finishing stage, we plan to reconfirm that 232 won’t be imposed,” Foreign Minister Toshimitsu Motegi, Japan’s lead negotiator, told a regularly scheduled news conference Tuesday in Tokyo.

Finance Minister Taro Aso said the deal won’t contain any provision on currencies, another worry for Tokyo. Japan wants to avoid any agreement hindering its ability to intervene in the foreign exchange markets in the event of a spike in the yen, or to expand the Bank of Japan’s massive monetary stimulus.

Trump said after the Group of Seven summit last month that he was not considering auto tariffs “at this moment.”

Over much of the past year, the scope of talks have narrowed to exclude the automotive sector, which is the source of most of the $67 billion U.S. trade deficit with Japan.

Instead, Trump and Prime Minister Shinzo Abe in August announced an agreement in principle of a deal that covered reductions in tariffs on agricultural and industrial goods, but not autos.

The two leaders said at the G7 summit in France that they hoped to sign the agreement at this month’s U.N. General Assembly in New York.

Trump’s letter to Congress did not disclose any contents of the agreements, but Japan had previously said it was willing to consider a deal that would reduce tariffs on U.S. farm products such as beef, pork, wheat and dairy to levels previously contemplated under the Trans-Pacific Partnership, a trade deal that Trump quit on his third day in office in 2017.

Trump’s letter said that the U.S. would pursue further trade negotiations with Japan.

“My Administration looks forward to continued collaboration with the Congress on further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan,” Trump said.

U.S. technology industry officials say they expect the digital trade agreement with Japan to be closely aligned with provisions in the new U.S.-Mexico-Canada Agreement (USMCA), which follow the U.S. model for internet development.

The USMCA provisions aim to ensure the free flow of data across borders without taxation, prohibit data server localization requirements and limit governments’ ability to require the disclosure of source code by the companies they regulate.

For Trump, the signing of even a partial trade deal with Japan centered largely on agriculture would provide some relief to U.S. farmers who have been battered by the 14-month U.S.-China trade war and lost market share.