We can’t help thinking that Japan and the United States have opened talks for a de facto Free Trade Agreement (FTA). Prime Minister Shinzo Abe and U.S. President Donald Trump have agreed in a meeting to launch new bilateral negotiations on trade, including tariffs on farm products, to reach what they call a Trade Agreement on Goods (TAG). The move deserves strong criticism as it largely contradicts the Japanese government’s stance denying an FTA with the U.S.
The two also agreed that the U.S. would not pose additional tariffs on vehicle imports from Japan so long as both sides are engaged in market-opening discussions. It appears that the Japanese government made a concession to discuss tariffs on agricultural produce in order to shield Japanese autos and auto parts from further tariffs that it definitely wants to avoid.
At a news conference held after the bilateral meeting, Abe stressed that a TAG to be negotiated with the U.S. is totally different from a comprehensive FTA that Japan has signed in the past.
This is doubtful, however, because the new framework looks nothing but a de facto FTA, considering that it includes negotiations on tariffs. Government officials have been saying at the Diet and other occasions that Japan is asking the U.S. to return to the Trans-Pacific Partnership agreement and will not enter negotiations on a bilateral FTA. Many farmers must be feeling betrayed by the latest announcement.
There is a serious concern that a TAG could demand Japanese agricultural industry to open its market at unprecedented levels.
According to Japanese government officials, Abe told Trump at the meeting that Japan would not accept lowering tariffs on farm and marine products more than already agreed under the TPP pact, and Trump said the U.S. would respect Tokyo’s position. This is something to give high marks to, but we cannot be completely certain that things will turn out as Japan expects.
Trump withdrew from the TPP deal, criticizing the pact negotiated by former U.S. President Barack Obama’s administration. There is no guarantee that Trump is not going to urge Japan to open agricultural markets further by threatening to pose additional tariffs on Japanese autos, in an effort to maintain support from U.S. agricultural organizations.
As a matter of fact, the Trump administration, which is seeking achievements prior to the midterm elections in November, has been pushing its trade partners to open their markets, threatening to impose import restrictions on steel and aluminum or high tariffs on automobiles, and reached a deal with South Korea, the European Union and Mexico.
Next year, trade agreements such as the new TPP pact without the U.S. and the Japan-EU economic partnership agreement are likely to take effect. If Japan is to accept further market liberalization in bilateral negotiations with the U.S., there is no way Japan’s agriculture can avoid further damage.
While campaigning for the Liberal Democratic Party’s leadership election earlier this month, Abe pledged to address affairs of state “in a humble and careful manner.” Since the details of the joint statement issued by Japan and the U.S. have not been disclosed, the government should carefully explain what has been agreed upon between the two leaders so as not to make farmers more worried.
Toshimitsu Motegi, minister in charge of TPP talks, said the two nations have not said in the first place that they would not discuss the possibility of entering negotiations on tariffs. His remarks are not enough to wipe away the feeling of distrust among people in regional areas toward the Abe administration’s farm policies.