Farm, auto trade high on agenda of Japan-US talks, envoy says

April 23, 2018

Tokyo- Opening Japanese agricultural markets and automobile trade imbalances will likely be priority areas in new Japan-US trade talks, which are also expected to cover the United States' additional steel and aluminum tariffs, US Ambassador to Japan William Hagerty has said.

While noting that the agenda has not been established yet, Hagerty told Jiji Press in an interview on Saturday, "Agriculture will be high on the list, given the tariff lines that are in place."

"If you look at the trade deficit itself, automobiles and auto parts are such a significant component," he also said. "I think that will be part of the discussion."

In addition, the ambassador said that the issue of whether the United States will exempt Japan from its recently introduced additional steel and aluminum tariffs will be "certainly one of the agenda items."

Hagerty was a member of President Donald Trump's delegation to summit talks with Japanese Prime Minister Shinzo Abe at the president's Mar-a-Lago resort in Palm Beach, Florida, last week, during which the two leaders agreed to start the bilateral trade talks.

Japanese trade minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer have been appointed as lead negotiators under the new framework.

Regarding the possibility of the trade talks developing into negotiations for a free trade agreement, Hagerty said that would be determined when Motegi and Lighthizer come together.

The ambassador then signaled his eagerness for a bilateral trade agreement. "I'm optimistic that we will find ourselves quickly on a path for a win-win trade relationship with Japan," he said.

Japan attaches weight to multilateral rulemaking on trade and investment under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, a new pact forged after the United States withdrew from the original TPP last year.

Ahead of his meeting with Abe, Trump assigned Lighthizer and National Economic Council Director Larry Kudlow to look at getting the United States back into the deal. In Mar-a-Lago, however, the president stated that he does not want to go back into the TPP.

Hagerty stressed that Trump's preference remains for a bilateral relationship.

The ambassador said his hopes are not high that the United States will move in the direction of joining the CPTPP unless the pact is dramatically revised.

"I'm not saying it could not be possible, as the president has said it's not impossible," he said. "But the talk that we hear right now is not encouraging."

On discussions about Japan boosting its acquisition of advanced U.S. defense technology, Hagerty said increased purchases are mainly about "enhancing Japan's capability to make our alliance stronger as we protect this region," rather than about cutting the U.S. trade deficit.

He also stressed that the Trump administration's tax and regulatory reforms are expected to help boost investment from Japan and develop a deeper and stronger bilateral economic relationship.

"There are trillions of dollars of idle cash sitting on Japanese company balance sheets." Hagerty said. "I see big hope to have more cross-border capital flow." Jiji Press