Prime Minister Shinzo Abe appears to have got what he sought from U.S. President Donald Trump on issues related to North Korea: a united position of keeping maximum pressure on Pyongyang to give up its nuclear and missile programs and Trump’s promise that the United States would “work very hard” for the return of Japanese abducted to North Korea. The developments came during talks at the president’s Mar-a-Lago resort in Florida this week ahead of Trump’s planned historic summit with North Korean leader Kim Jong Un. But in stark contrast, Abe and Trump remained far apart on the simmering trade issues. Trump effectively rebuffed Abe’s call for the U.S. to return to the Trans-Pacific Partnership and insisted on bilateral talks to cut the U.S. trade deficit with Japan.
Trump said he would not exempt Japan from the recently imposed steel and aluminum import tariffs — as was done for other U.S. key allies and partners — unless a deal is reached with Tokyo to slash the “massive trade deficit with Japan.” This week it was reported that Japan’s trade surplus expanded 5.7 percent to ¥7 trillion with the U.S. in fiscal 2017. Abe and Trump agreed to begin a new framework of discussions between the two countries for “free, fair and reciprocal” trade, to be led by economy revitalization minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer. Concern remains that with midterm elections looming in November, Trump would continue to press Japan for bilateral talks on a free trade deal under terms favorable to American interests.
The Trump administration’s protectionist trade policies, as represented by the steel and aluminum tariffs and additional trade sanctions against China on charges of intellectual property violations, have raised the specter of a global chain reaction of trade friction that could slow down worldwide trade and possibly affect Japan’s economy, which has benefited greatly from brisk demand in overseas markets. The government should press the U.S. to abandon its protectionist policies and insist that all trade issues be resolved through the multinational framework under World Trade Organization rules.
The joint news conference that Abe and Trump gave at the end of their two days of talks highlighted their differences on trade. Abe stated Japan’s position that the TPP, which Trump pulled the U.S. out of with one of his first executive orders upon taking office in January last year, “is the best for both countries.” Since the remaining 11 participants last month signed the pact — now called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) — it was reported that Trump has tasked Lighthizer and White House economic adviser Larry Kudrow to look into the prospects of U.S. membership.
After the talks with Abe, however, Trump reiterated that his administration had little interest in rejoining the TPP unless its terms are dramatically changed — he said he would consider it only “if they offered us a deal that I can’t refuse on behalf of the United States.” Given the difficulties involved in renegotiating the terms of TPP, the prospects of the U.S. rejoining the pact appear slim for the time being. Trump instead repeated his emphasis on bilateral negotiations on trade issues. “I like bilateral better. I think it’s better for our country … for our workers and I much would prefer a bilateral deal.” In response to Abe’s request to exempt Japan from the steel and aluminum tariffs, Trump said that would depend on a deal reached with Japan to cut the bilateral trade deficit. “That would certainly be something we would discuss. … And I would be looking sometime in the future to take them off” the tariff list, he said.
It seems clear that the Trump administration is seeking to use the newly agreed framework of trade talks, in which the U.S. would likely attempt to open up such sectors as agriculture and automobiles to more U.S. exports, as a launch pad for negotiating a bilateral free trade agreement, which Tokyo remains wary of.
It was significant that Japan and the U.S. were able to coordinate their positions on North Korea ahead of Trump’s planned talks with Kim, who will also be meeting South Korean President Moon Jae-in next week for the first inter-Korea summit in more than a decade. That does not mean Japan should change its position on trade issues. The government needs to make certain the CPTPP deal will be ratified at home to ensure its prompt implementation, and continue to press the U.S. to return to the pact. It should insist that trade disputes should be settled under multinational free trade rules.