Japan, U.S. Agree to Create Framework to Expand Trade

September 26, 2018

New York- Japan and the United States agreed on Tuesday to create a framework, including tariff talks, for expanding trade between the two countries.

The two governments reached the accord at the second round of their "free, fair and reciprocal," or FFR, ministerial trade dialogue in New York.

The meeting came at a time when trade issues are becoming a source of friction between Japan and the United States, with U.S. President Donald Trump having voiced his frustration at his country's massive trade deficit with Japan.

"We basically shared the view on a framework and steps for boosting bilateral trade," Japanese economic revitalization minister Toshimitsu Motegi, who represented Japan at the New York meeting, told reporters after the one-hour talks.

Tokyo and Washington are aiming to reach a formal agreement to form the framework, at a meeting between Japanese Prime Minister Shinzo Abe and Trump here on Wednesday, with a relevant statement expected to be announced after the bilateral summit.

At Tuesday's meeting, which was also attended by U.S. Trade Representative Robert Lighthizer, the two countries "made efforts to bridge the gap" between their positions, based on an idea presented by the Japanese side as a basis for discussions, according to Motegi.

Motegi stopped short of unveiling specifics of the talks. Still, he said, "We are discussing areas in which you are interested," suggesting that the two sides talked about automotive trade and tariffs on farm products.

Tokyo is desperately hoping to see Japanese products exempted from additional automobile and auto parts tariffs planned by the U.S. administration.

The Japanese side is expected to consider launching bilateral tariff talks on the assumption that it obtains a U.S. promise to exclude Japanese automobiles and auto parts from the extra tariffs.

In 2017, Japan's trade surplus with the United States amounted to as much as about 7 trillion yen. Over 70 pct of the total was from automotive trade.

The Japanese government is concerned that the country's economy will be hit hard if the additional U.S. tariffs of up to 25 pct are imposed on Japanese automobiles and auto parts, informed sources said.

Japan accepted the creation of the trade promotion framework, apparently believing that it can avoid the extra U.S. tariffs at least while the expected tariff talks are going on, according to the sources.

The second round of FFR dialogue was initially slated to take place on Monday afternoon, but was postponed to Tuesday due to scheduling difficulties on the U.S. side. Jiji Press