Trump seeks quick start to trade talks with Japan

Photo illustration/Garrett Evans

The Trump administration will take its first step this week toward crafting a bilateral trade deal with Japan, an agreement that is likely to face significant hurdles.

President Trump and Japanese Prime Minister Shinzo Abe will meet in Washington on Friday for two days of discussions aimed at jump-starting a historic trade agreement that would amount to a major political prize for the new White House.

{mosads}A deal with the world’s third-largest economy is high on Trump’s agenda as he seeks to negotiate better trade agreements for American workers with strategic allies.

Trump is seeking fast progress toward a two-way trade deal with Japan after abandoning the Trans-Pacific Partnership (TPP), a deal involving 12 countries that he called “a disaster” for the United States.

“If the administration is dead set on doing only bilateral deals, Japan seems to be a good place to start,” said Edward Gerwin, a senior fellow for trade and global opportunity at the Progressive Policy Institute.

During the presidential campaign, Trump said he would make quick work on trade with Japan, eliminating the country’s tariffs on U.S. beef “so fast” and “in one day.” 
  Experts caution that fast progress on a deal with Japan could prove difficult.

“Getting fast results with Japan isn’t the experience of generations of American trade negotiators,” Gerwin said.

“And it’s hard to see how Trump could cut a better deal than the TPP on U.S. access to Japan’s market, especially when so many of his other trade proposals — like currency retaliation, import duties and ‘repatriating’ U.S. supply chains — would really limit opportunities for Japan in the United States,” he said.

Still, Abe has shown a willingness to engage with Trump. He was the first foreign leader to meet with Trump in New York after the November election and the two have talked trade over the phone.

The Japanese leader, who is an avid golfer like the president, even presented Trump with a driver worth nearly $4,000.

The two leaders will head to Florida on Friday afternoon, where they will play golf at Trump’s private Mar-a-Lago resort in Palm Beach.

Jeff Schott, a senior fellow for international trade policy with the Peterson Institute for International Economics, said he isn’t surprised that Japan is open to discussing a bilateral deal with the United States.

“Japan is absolutely not going to say ‘no,’ but getting them to say ‘yes’ when terms of a deal are spelled out is another issue,” he said.

Abe has kept the idea of a bilateral deal in play, but has cautioned that “we need to debate this, focusing on what kind of economic relationship is best for the U.S. and Japan.”

“I suspect Japan will be hard pressed not to say they are open to listening and, more importantly, what they want to accomplish in a free trade agreement,” said Wendy Cutler, who worked for five years in the Obama administration on TPP and for 20 years on U.S.-Japan bilateral talks at the Office of the U.S. Trade Representative.

Trump’s move to pull the U.S. out of the TPP shortly after coming into office dealt a blow to Abe, who had spent years’ worth of political capital selling the agreement. Japan’s parliament ratified the deal just days before the U.S.  withdrawal.

In leaving the TPP behind, Trump said that “we’re going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country, and it’s going to be reversed.”

But supporters of the TPP said the deal made progress in solving long-intractable issues between the two countries.

“In the case of Japan, if the standard was that the TPP deal wasn’t good enough, that’s going to be a hard bar to jump,” Schott said.

Many in the trade world argue that the TPP was akin to a bilateral agreement between the U.S. and Japan, one where two of the world’s top economies received the shared incentives of being part of a 12-nation deal spanning the Pacific Rim that included Australia, New Zealand and Chile.

“TPP basically is a combination of a bilateral with Japan, a NAFTA renegotiation and a bilateral with Vietnam and Malaysia,” Cutler said.

Mireya Solís, a senior fellow in Japan studies at the Brookings Center for East Asia Policy Studies, said Abe and other Japanese leaders are going to want specifics about what Trump doesn’t like about the TPP and why he chose to withdraw from it.

The Japanese won’t likely reject outright the possibility of a bilateral agreement, but they aren’t giving up on the TPP just yet.

In seeking to persuade Trump to reconsider the TPP, Abe is expected to come to the U.S. armed with data on how much Japanese companies contribute to the U.S. economy and how that investment is responsible for 840,000 jobs here, Cutler said.

Japanese officials also are expected to arrive in Washington with a package for infrastructure investment and job-creation projects in the United States.

Crafting a bilateral deal would mean revisiting many of the tough issues that were dealt with in the TPP negotiations, including market access for agriculture and cars.

“Even keeping Japanese agriculture concessions in TPP may be difficult because the overall balance of concessions is different with only two parties,” said William Reinsch, a trade expert at the Stimson Center.

Reinsch noted that the U.S. made some concessions on autos in the TPP.

“If Trump wants to walk those back, which is likely, there will be a lot of Japanese resistance,” he said.

Currency could be another stumbling block in the talks. Trump during the campaign accused Japan of manipulating its currency, the yen.

“If Trump decides to seek enforceable currency provisions, the Japanese would be hard pressed to accept moving forward with a two-way agreement,” Cutler said.


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