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USTR and National Economic Council Call on US-Japan Trade

September 27, 2018

The White Houses
Office of Press Secretary
For Immediate Release 
September 26, 2018

Editors note: This is an on-the-record script of a call between  USTR Robert Lighthizer and National Economic Council, Larry Kudlow, on what to expect on trade between the US and Japan.

309 P.M. EDT

     MS. WALTERS:  Okay, with that, we are going to start this briefing.  I'm joined today by Ambassador Lighthizer and Larry Kudlow, Assistant to the President.  This will be an on-the-record, embargoed until the conclusion. 

     With that, I'm going to turn it over the Ambassador and to Mr. Kudlow, who are going to open it up with a few brief remarks.  And then we will take questions from the pool who is in the room.       

MR. KUDLOW:  Just -- I convinced my friend, Bob Lighthizer to talk about some very positive developments in the U.S.-Japanese trading relationship, including an agreement between the U.S. and Japan.  And also a trilateral agreement with the EU, the U.S., and Japan.  It's a very great piece of work.  I admire him for it.  And I actually convinced him to come and talk to the media, which took me at least 25 minutes.

Mr. Lighthizer.

AMBASSADOR LIGHTHIZER:  So with that said, I'm finished.  (Laughter.) 

No, I would say -- so over the course of the last two days, we have been engaged with the Japanese, and to some extent with the Europeans, on trying to come to a couple of agreements.

One was a trilateral statement which was put out -- most of you -- I would commend those of you who follow these things to look at it.  It is a -- it's the fourth in a series of meetings that the United States has had in a trilateral group with Japan and Europe.  And the purpose of that group is really to try to reorient trade laws in a way that will effectively deal with some of the non-market practices of China.

So there are things dealing with subsidies, and non-market economies, and access, and all the kinds of practices that we object to.  So it's a detailed statement.  It's part of an ongoing process.  And I think it's a very important statement.  I know the Europeans and the Japanese do, too.  And it's -- it really is the joint leadership of Japan also, as well as Europe. 

So that's one item which we can talk about.  The other item is that I believe that they're going to announce today that the United States will have bilateral trade agreement negotiations with Japan.

There has been some reluctance on that.  There's this issue of the TPP and whether the U.S. would rejoin the TPP.  And the President is not going to join the TPP.  But this is a very important step, in terms of expanding our relationship with Japan.

If you look at the five countries who are in the TPP with whom we do not have an FTA, by far the biggest is Japan.  It has about a $5 trillion economy.  The second biggest, probably, has a $300 billion economy, to give you an idea.  It's probably 15 times bigger than the second. 

So this is very important beginning.  It's not an agreement in terms of a trade agreement, but it's the beginning of negotiating a trade agreement.  And it's -- there's a lot of important things that we expect to do together.

And we will try to do this in two tranches.  One sort of early harvest -- the kinds of things that we can do in the next few months.  And then longer-term problems. 

Q    Would you describe this as a free-trade agreement or would it be something less of that that would not require congressional approval?

     AMBASSADOR LIGHTHIZER:  I expect this to require -- that's a really excellent question -- to require congressional approval.  I will start the process of getting TPA. 

     So for those of you who don't know, TPA is -- requires a kind of an easier way to get congressional approval, subject to a delegation of authority from the Congress to the President.  And things that require changes in tariffs or changes in statute generally go through the Trade Promotion Authority, or TPA, process.  This, I expect to go that way.  And I will be talking to Congress about it tomorrow.

     Q    Okay.  Thank you. 

     Q    What can you tell us about the current status with China?  The President obviously has threatened this phase three.  Is that imminent?  What can you tell us about where things stand?  

AMBASSADOR LIGHTHIZER:  Well, the President, as you know, announced that -- he directed me to put tariffs in place -- 10 percent tariffs in place -- on $200 billion worth of goods traded from China to the United States.  Those went into effect through Act Three, through all of our process, Monday.  So those tariffs are being paid.  It's a very long process, a very fair process.  Everyone gets a chance to be heard, and to have hearings and the like.

     There really isn’t -- there are no developments beyond that at this point.  Those went into effect.  They are designed to change Chinese practice, which we find to be anti-competitive and detrimental to the United States. 

     So, we’ll see how that develops over time.  There’s nothing going on right now. 

     Q    Okay.  And with Canada, where do things stand there?  Do you expect that you’ll be able to meet the deadline and get a trilateral agreement there?

     AMBASSADOR LIGHTHIZER:  Well, it’s our hope that we’ll end up with an agreement with Canada as part of a reformed tripartite agreement.  That is our hope. 

     At this point, we’re running out of time, at least in the first -- and in the immediate future.  We have until the end of this month to give our text.  We have texts on an excellent agreement.  I would say it’s probably the most pro-trade agreement countries have entered into between the United States and Mexico.  That’s on track.  We’ll submit that language, as we have to, under a Trade Promotion Authority at the end of this month.  I think there’s still time to have Canada come into that agreement.  It certainly is my hope that they do, but we’ll see how that develops.

     Q    Ambassador, what changed with Japan that the -- in your assessment -- maybe Larry, if you want to weigh in too -- what -- you know, Abe had been fairly steadfast in saying he would not take this step.  So what changed between -- in this week to get Abe there?

     AMBASSADOR LIGHTHIZER:  Well that’s really a question you’re going to have to ask them.  It’s been the President’s view and the Vice President’s view that we should have a bilateral trade agreement between the United States and Japan.  It’s our hope -- pardon me -- it’s our hope that we do have one. 

We -- as to why they changed their strategy, I don’t know.  I think this is the wise thing for them to do.  If you look at -- these are the two biggest market-oriented economies in the world.  We have a lot of connections back and forth.  We can only make them better. 

So, as to why they changed their mind, I don’t know that's -- this has been our policy.  We’re grateful that we do.  We think it’s clearly in the interest of the United States but also in the interest of Japan that we further develop this relationship.

Q    Hi, Mr. Ambassador.  How will what you negotiate with Japan be different from what is in TPP?

AMBASSADOR LIGHTHIZER:  Well, I’m not going to go through all of the intricacies of a negotiation that really haven’t even -- that are just started.  I would say, the President objected to TPP.  He found a lot of problems with it.  I certainly agree with him.  I think it was a very weak agreement. 

If you go down through one area after another, it’s not the highest-level standards that you can have.  There are rules of origin, there's just -- I don’t want to go through them all.  There are an awful lot of differences between what was negotiated in TPP and the kind of agreement we would expect to have with Japan.  But it’s impossible to kind of go through the details at this point.

Q    So, two questions:  Do you have any timeline for the negotiations with Japan and, like, when you would expect to, you know, maybe have your first showing of what you’ve accomplished, or anything like that?

AMBASSADOR LIGHTHIZER:  We really don’t at this time.  We’ve just announced this.  But our hope is to do this in two tranches:  to have a kind of an early harvest, which trade people always talk about.  There are a number of things, particularly the goods area -- tariffs and other obstacles to trade -- that we hope to tackle fairly quickly in the next few months. 

I would remind you that, on things that require statutory changes, we’re going to have to go through the congressional process, wait 90 days, and then start that part of it.  So there’ll at least be a few months before we can do the kinds of things that require statutory changes.  But we’ll be talking to each other very quickly.

Q    Mr. Ambassador, Japanese autos -- when would that -- would that be in the first tranche, or the later tranche?  When would you address that issue?

AMBASSADOR LIGHTHIZER:  Well, I don’t want to get into what’s going to be -- which is going to be in which tranche. 

Our objective is to challenge -- is to take on the challenges in goods first.  Certainly that’s a goods area. 

But it would be unfair to my Japanese counterparts to suggest that we’ve sat down and outlined any kind of a timeframe. 

Just notionally, we have two kind of tranches, two groups of things that we expect that to have done.  And what falls in which one will depend, really, on ease of getting it done in a fairly short period of time, because we want to make -- the President wants (inaudible), the Prime Minister wants to make real progress very quickly. 

MS. WALTERS:  With that, I know we have to get the pool to their next event.  Thank you all who are listening in on the phone.  We will be distributing a transcript.  So, if any part of the call was difficult to hear, there will be a transcript. 

Thank you and have a great day. 

                        END                3:19 P.M. EDT


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