Faced with auto tariff, Japan agrees to enter trade talks with US

NEW YORK, Sept. 28 ― Japan has agreed to begin negotiations for a trade agreement on goods (TAG) with the United States, in a move that may shield Tokyo from the U.S.’s proposed harsh tariffs on Japanese vehicle imports, for the time being.

The new trade talks will start after the two sides complete necessary domestic procedures, which will likely happen early next year.

On Sept. 26, Japanese Prime Minister Shinzo Abe met U.S. President Donald Trump in New York at the sidelines of the United Nations General Assembly.

“The new trade talks will focus on goods and this is not a negotiation for a comprehensive free trade agreement (FTA),” Abe said at a joint press conference after the meeting. For him, FTAs should include wide-ranging areas such as rules on investments and services.

Abe also stressed: “As part of the agreement, the U.S. would not imposed additional tariffs on Japanese vehicle imports.”

Yet, Abe’s view contradicts what the U.S. has said.

U.S. Trade Representative Robert Lightizer was quoted in the media by saying that the U.S. and Japan were aiming to approve a full-blown FTA soon.

Lightizer also said that he will start consultations with lawmakers to get approval from the U.S. Congress due to the “fast track” trade negotiating authority law. The law requires the congress to be notified 90 days before negotiations can begin.

Japan has been reluctant to enter FTA negotiations with the U.S. because the offer it made for the agricultural market access in the Trans-Pacific Partnership (TPP) was the maximum it could bear.

So, it has persuaded Washington to return to the TPP, even after Trump pulled out of it in January 2017.

The joint statement by Japan and the U.S. notes that the talks “will respect positions of the other government.” The Japanese government insists the phrase specifies its position not to exceed tariff cuts on agricultural products already agreed in the TPP.

But for the U.S. part, “respect” could mean anything.

Trump has made clear he is unhappy with Japan’s 69 billion trade surplus with the U.S., nearly 80 percent of it from Japanese auto exports, and has been pressuring Abe to address the problem.

At the joint press conference, Trump said he is confident the two sides will reach an agreement. “It can only be better for the United States because it couldn’t get any worse because of what’s happened over the years,” he added.

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