Japan Agrees with U.S. on Trade Negotiations, Escapes Fresh Auto Tariffs for Now

September 27, 2018

New York- Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump agreed on Wednesday to start negotiations on a new pact to expand bilateral goods trade.

In making the decision to initiate the bargaining process for concluding a trade agreement on goods, or TAG, during their 75-minute meeting at a New York hotel, the leaders affirmed that additional U.S. tariffs will not be slapped on Japanese automobiles during the process.

At a press conference after the Japan-U.S. summit, Abe said he confirmed with Trump that the United States will withhold the car tariff implementation while the negotiations, which will chiefly cover Japanese tariffs on U.S. farm products, are under way.

To escape the additional import duties for the time being, Japan reluctantly accepted a U.S. request to launch bilateral tariff negotiations, informed sources said.

On the Japanese tariff issue, the prime minister noted that Washington will respect Tokyo's stance of not making concessions beyond commitments it has made to conclude economic cooperation pacts with other economies.

Japanese government officials have said Japan cannot pledge a tariff rate that is lower than the level it agreed with 10 other member economies of the Trans-Pacific Partnership pact.

Japan, which currently imposes a 38.5 pct tariff on U.S. beef, is set to eventually reduce beef tariff rates for the TPP partners including Australia to 9 pct.

According to a joint statement issued after the summit, Abe and Trump "affirmed the importance of a strong, stable, and mutually beneficial trade and economic relationship" between Japan and the United States.

Trump "reiterated the importance of reciprocal trade, as well as reducing the trade deficit with Japan and other countries," while Abe "emphasized the importance of free, fair, and rules-based trade," the statement said.

The document indicated that fresh tariffs on Japanese cars will be shelved, saying that the two countries will "refrain from taking measures against the spirit of this joint statement" during the consultation process.

The statement made it clear that Tokyo and Washington "will respect positions of the other government."

The Japan-U.S. relationship will be firmer than ever, Trump said, welcoming the results of his meeting with Abe, according to informed sources.

The two countries will develop "win-win economic ties" by further promoting bilateral trade, Abe told the news conference, adding that the envisaged trade deal will be "completely different" from a comprehensive free trade agreement sought by the Trump administration.

But the TAG talks will be followed by negotiations on services trade and investment-related issues, according to the statement.

Chances cannot be ruled out that the proposed pact will become similar to an FTA depending on the course of the negotiations, observers said.

Japanese economic revitalization minister Toshimitsu Motegi, who attended the Abe-Trump meeting, said there were no discussions on the dollar-yen exchange rates or on a possible curb on Japan's auto exports to the United States.

"As a flag bearer of free trade, Japan opposes any steps that could lead to managed trade," Motegi said.

At the New York summit, Abe and Trump also took up issues involving North Korea and reaffirmed that their countries and South Korea will cooperate with each other ahead of a proposed second meeting between Trump and North Korean leader Kim Jong Un.

Abe and Trump then recognized the common goal of fully implementing U.N. sanctions resolutions against Pyongyang and agreed on Japan-U.S. cooperation for resolving the issue of North Korea's abductions of Japanese nationals decades ago, informed sources said.

At the press conference, Abe reiterated his readiness to meet with the North Korean dictator to find a resolution to the issue, saying, "I myself must confront Kim." Jiji Press