White House facing pressure from US business groups on trade with Japan

Business leaders are pressuring the White House to refuse to lower the bar for Japan on trade talks ahead of a White House meeting Friday between President Obama and Japanese Prime Minister Shinzo Abe.

Obama and Abe, who are meeting for the first time since the Japanese leader took over in December, are expected to discuss a broad range of economic issues, including Japan's entry into negotiations on an Asia-Pacific trade deal.

The Trans-Pacific Partnership (TPP) talks involve Malaysia, Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam, Canada and Mexico, but Japan has long been eyed as a possible partner.

The problem is that many U.S. business groups fear including Japan would result in a less meaningful deal.

“We would be reluctant to scale back standards to bring Japan in,” John Engler, president of the Business Roundtable, told reporters on Thursday.

The fear that Japan’s inclusion would water down the agreement is acute for U.S. auto manufacturers, who have pushed to keep Japan out of the talks. They have long complained about the severe imbalance in auto trade between the two countries.

The auto companies point out that 70 percent of the $76 billion trade deficit the U.S has with Japan comes from the auto sector.

Joe Hinrichs, Ford's president of the Americas, said on Thursday that he hopes the "U.S. government will send a clear message that any future trade policies with Japan must ensure a level playing field and not come at the expense of American autoworkers."

Senior Obama administration officials on Thursday suggested they would side with the business groups.

“We've made very clear from the start that addressing critical outstanding issues” including opening up its auto market "were an important precondition for considering Japan’s interest in joining TPP, and that’s been one of the subjects of consultations over the last, almost a year now,” White House trade expert Mike Froman told reporters.

“We take those concerns very seriously and are in consultations with Japan over those issues,” he said.

Froman stressed that the 11 nations in the talks have agreed to an “ambitious, high-standard, 21st-century trade agreement” and that “everything is on the table and subject to negotiation, and with a goal of a comprehensive agreement.”

“Anybody who joins TPP would be expected to sign on to that goal, as well,” Froman said.

Engler argued that the trade talks are “too far down the road” to add Japan at this time. Doing so could set back efforts to wrap up the talks this year, something that could also curtail Obama’s ambition to double U.S. exports by 2015, a promise he made in his 2010 State of the Union address.

“They are too late to this party,” Engler said of Japan.

Engler says Japan could be invited into the partnership once the terms for inclusion are set by the countries now negotiating the pact.

“One of the objectives is to get a higher standard agreement in place, and it's important to get it done, then invite Japan to come on board,” he said.