Economic talks between Japan and the United States have begun, signaling a leap into economic diplomacy with the administration of U.S. President Donald Trump, who has viewed the trade deficit with Japan as problematic.
Japan's Deputy Prime Minister Taro Aso and U.S. Vice President Mike Pence agreed in their first meeting to proceed with talks in three areas: rules on trade and investment, collaboration on economic policy, and cooperation in the development of infrastructure and energy.
The talks were proposed by Japan during a summit between Trump and Japanese Prime Minister Shinzo Abe in February. Trump, who has repeatedly made controversial statements in the past, is not directly involved, and has instead left dialogue up to his No. 2 man. During their first meeting, Aso and Pence did not delve into concrete issues. Instead, the talks generally followed in the footsteps of the summit, during which Trump withheld criticism of Japan.
In a news conference, Pence referred to the prospect of the economic dialogue developing into a free trade agreement (FTA) between Japan the United States. The U.S. is seeking bilateral negotiations, and it could press for unilateral market liberalization.
Trump pulled the U.S. out of the Trans-Pacific Partnership (TPP), which had been negotiated between 12 countries including Japan and the United States, and shifted his focus to bilateral negotiations. The idea has been to draw concessions from other countries, utilizing the overwhelming economic might of the United States.
Normally under a bilateral FTA, both countries reduce tariffs for mutual benefit. And if such an agreement is being forged, then it probably should be promoted.
The Trump administration, however, could make demands that give the United States an advantage. Trump in the past has stated "free and fair" trade is necessary, while criticizing Japan's auto trade as unfair. Yet it is the United States that imposes a duty on vehicle imports -- Japan has already eliminated this tariff. Trump has also criticized devaluation of the yen, but when the yen has been strong in the past, sales of U.S. vehicles have still been sluggish.
The United States is also poised to demand that Japan liberalize its agriculture market, but Japan did in fact agree to reduce tariffs under the TPP. It was the Trump administration that unilaterally pulled out of the TPP.
Japan should not comply with bilateral trade negotiations that would harm its national interests. We hope Japan will persevere in calling for the U.S. to return to the TPP, which would contribute to growth in the Asia-Pacific region as a whole.
Pence previously served as governor of Indiana, which has assembly plants for Japanese vehicles, and it is understood he has some appreciation for Japan's contributions to the U.S.
Making use of the framework of dialogue between the No. 2 figures of both countries, Japan should search for a path that avoids being brought in line with the pace of the Trump administration.