Japan Wants to Keep Trade Hardliner Wilbur Ross Away From Some Economy Talks

April 18, 2017

Japan wants to keep Commerce Secretary Wilbur Ross out of an economic dialogue with the U.S. as it seeks to avoid disputes with the Trump administration over a weaker yen and trade imbalance, according to a Japanese official who asked not to be identified.

[Isabel Reynolds, Maiko Takahashi and Connor CisloApril 17th, 2017 [Bloomberg Politics]

Ross, seen as a hardliner on trade issues, joined Vice President Mike Pence in Tokyo on Tuesday as the nations kick off their exchange. The commerce chief met with his counterpart, Trade Minister Hiroshige Seko, on Tuesday morning, although he won’t join the formal dialogue between Pence and Japanese Deputy Prime Minister Taro Aso, another government official said.

Prime Minister Shinzo Abe had sought to deal on economic issues exclusively with Pence, who is seen as relatively friendly because of his experience with Japanese inward investment as governor of Indiana. Japan wants to keep the talks separate to ensure that the framework is set by Pence and Aso and doesn’t include requests on specific trade issues, such as automobiles. The Japanese officials asked not to be identified because the matter is confidential.

Read more on how Japan planned to avoid Trump’s wrath on trade

“We’ve made good progress in terms of establishing the overall issues and the frame of reference for continuing dialogue,” Ross told reporters in Tokyo after his meeting with Seko. Asked whether they discussed a potential free-trade pact between the nations, Ross said “it’s a little bit early to say just what form things will take, but we are certainly eager to increase our trade relations with Japan, and to do so in the form of an agreement.”

Ross said he and Seko plan to meet again in Washington in June. 

During his confirmation hearing in January, Ross was outspoken about barriers to U.S. exports of autos and agricultural products. While he didn’t single Japan out for criticism, he said some countries used non-tariff barriers like environmental standards and inspections to stymie U.S. imports, and asserted that American beef was “good enough for foreigners to eat" despite concerns about mad cow disease.

Unwanted Issues

“This means of course that the U.S. will tackle the issues Japan doesn’t want to,” Hiroshi Kishi, a former trade ministry official who is now a professor at Keio University, said before Ross’s visit. “Japan tried really hard to keep it to simple macro issues and things that would not cause a problem, but it’s now clear that the U.S. will not be satisfied with that."

Japan has the second-largest goods surplus with the U.S., making it a target for President Donald Trump. He criticized the country for failing to buy American-made vehicles when he formally pulled out of the Trans-Pacific Partnership trade agreement in January.

The collapse of TPP was a disappointment for Abe, who threw his weight behind the talks and secured exemptions for tariff-free trade on certain sensitive agricultural products. Abe countered Trump’s attacks by telling lawmakers that Japan charges no tariffs on U.S. vehicles, and noting that European cars sell relatively well in the country.

Abolish Tariffs

Before the TPP fell through, Japan agreed to abolish tariffs on 81 percent of agricultural products, compared with about 97 percent in other member countries, according to Yorizumi Watanabe, a former trade negotiator with the foreign ministry. Tariffs would have been abolished on 99.9 percent of manufactured goods in a boost for Japan’s carmakers, he added.

To rebuild ties, Abe launched a personal charm offensive on Trump, spending five hours on the golf course with him during a two-day visit in February. He managed to secure the dialogue between Aso and Pence, part of a plan to avoid open disputes with Trump over the weaker yen, the imbalance in auto trade or protection of Japan’s agriculture sector.

The trade imbalance is likely to be among the topics Ross seeks to discuss during his visit, according to Kishi, the former trade ministry official. Japan would probably be in a weaker position than China in any new trade talks with the U.S., he said.

“China said it would help contain North Korea, and asked for something from the U.S.,” Kishi said. “Japan doesn’t have anything tempting to offer the U.S. in return, so it will be under pressure.”

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