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Japan to rebuff bilateral U.S. trade talks, propose common rules

The Yomiuri Shimbun

The Yomiuri Shimbun The government is preparing to propose that Japan and the United States jointly create unified trade and investment rules, but it will not accept a U.S. request to launch bilateral trade talks, according to sources.

The first round of the Japan-U.S. economic dialogue will start in Tokyo on Tuesday. The government is making the final arrangements for a proposal that both sides write trade and investment rules, including on protection periods for intellectual property rights and regulations covering the entry of foreign capital into certain industries. The government aims to have these Japan-U.S. rules adopted widely across the Asia-Pacific region.

However, the government wants to avoid bilateral trade negotiations the United States might call for as Washington seeks to reduce its trade deficit with Japan. Instead, the government will seek common ground that could produce benefits for both sides.

That was the main thrust of discussions held Thursday among Prime Minister Shinzo Abe, Deputy Prime Minister Taro Aso (who is also finance minister) and other key ministers at the Prime Minister’s Office as they planned their approach to the economic dialogue. Other attendees included Chief Cabinet Secretary Yoshihide Suga; Foreign Minister Fumio Kishida; Economic Revitalization Minister Nobuteru Ishihara; Economy, Trade and Industry Minister Hiroshige Seko; and Agriculture, Forestry and Fisheries Minister Yuji Yamamoto.

Aso and U.S. Vice President Mike Pence will attend the first dialogue meeting. During preliminary coordination between officials of both nations, the U.S. side called for the start of bilateral trade negotiations, but the Japan side conveyed its position of not accepting this request. Japan is seeking ways for Tokyo and Washington to craft trade and investment rules together.

Concrete examples of rules expected to be discussed include strengthening protection for intellectual property rights; easing regulations on the entry of foreign companies into financial and retail industries; and abolishing preferential treatment given to state-owned enterprises.

The Trans-Pacific Partnership free trade agreement spelled out common trade and investment rules of an unprecedentedly high standard, such as having all participating nations set their term of copyright at 70 years from the death of the copyright holder. However, the launch of the administration of U.S. President Donald Trump has thrown the prospect of the TPP coming into effect into a tailspin. Japan hopes to break this deadlock through discussions in this economic dialogue.

“I want [the dialogue] to create rules that other nations could also adopt,” Aso said Wednesday at the House of Representatives’ Financial Affairs Committee.

However, the U.S. negotiating approach remains unsettled, so preliminary talks apparently did not make as much progress as hoped. There are also concerns the U.S. side will demand the start of bilateral negotiations in the opening round of dialogue talks, which could prevent discussions from moving forward.

Japan is emphasizing the establishment of common rules because it wants to create a Japan-U.S.-led open and free economic order in the fast-growing Asia-Pacific region. It also aims to curb China’s attempts to expand an economic sphere that is advantageous mainly to itself.

Trump has insisted the U.S. trade deficit has resulted in jobs being lost in the United States, and he is fervently seeking to reduce this deficit. During his summit meeting with Chinese President Xi Jinping on April 7, both leaders agreed to a “100-day plan” for talks on ways to cut China’s trade deficit with the United States.

The Japan side is concerned a similar proposal could be put forward during the economic dialogue. But, unlike China, Japan does not have barriers blocking U.S. imports. In auto trade, Trump has been critical of the small number of U.S. vehicles that Japan imports. This is despite the fact Japan does not impose tariffs on U.S. vehicles — though the United States does so on imported cars. U.S. vehicles do not sell well in Japan because they do not fit the needs of Japanese consumers.

Talks on agricultural products could also be thorny. Under the TPP, Japan agreed to steps including lowering the tariff imposed on U.S. beef imports. If bilateral negotiations were to go ahead, it would be extremely difficult politically to make bigger concessions than those offered during the TPP talks.Speech

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