NTERVIEW: U.S. Auto Tariff Threat Might Pressure Japan, Cutler Says

May 30, 2018

Tokyo- The ongoing U.S. investigation into auto and auto parts trade for possible additional tariffs might exert pressure on Japan's auto trade policy, former Acting Deputy U.S. Trade Representative Wendy Cutler has said.

"It is possible that he (U.S. President Donald Trump) would try and use the threat of tariff increases on autos and auto parts as a way to get Japan to open its automotive market and/or agree to bilateral trade negotiations," Cutler said in an interview with Jiji Press in Tokyo on Monday.

She pointed out that when the United States imposed additional tariffs on steel and aluminum imports in March under Section 232 of the 1962 Trade Expansion Act, "the president was clear that he would consider granting exceptions in exchange for movement on trade negotiations."

If "that logic" is extended to autos and auto parts, Japan may face pressure, Cutler suggested.

But she said the impact of the possible new tariffs on auto and auto parts on the U.S. midterm elections in November is "not entirely clear."

"Some (U.S.) auto companies and workers may realize that their business and jobs may be threatened under a 232 national security action," Cutler said. "Also, it could impact consumers by raising the price of cars."

"I believe that justifying import restrictions in the automotive sector based on security concerns is a bridge too far," she added.

Japan and the United States will start a new framework for trade dialogue as early as the second half of June, led by Japanese economic revitalization minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer.

Cutler proposed that the dialogue should move forward discussions on agriculture and automotive trade, and "how to bridge the difference between the TPP (Trans-Pacific Partnership) and bilateral (trade deals)."

But she also said that "they're going to be very difficult talks because the United States and Japan have differing views of how to proceed on the trade front."

Cutler welcomed the approval by the House of Representatives, the lower chamber of Japanese parliament, of a bill to ratify a revised TPP, officially called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. A bill needed to implement the CPTPP free trade agreement, signed by 11 countries after the United States withdrew from the original deal last year, has also passed a Lower House committee.

"An important milestone has been achieved... It provides important momentum for other CPTPP countries to accelerate their ratification efforts," she said.

Under the administration of U.S. President Barack Obama, Cutler led U.S. trade policy on Asian countries, including TPP negotiations.

She suggested that it will be not easy for the Trump administration to rejoin the TPP, but said the Japanese legislative efforts will have an "absolutely" good effect on free trade in the Asia-Pacific region.

After entering the U.S. Commerce Department in 1983, Cutler moved to the Office of the USTR in 1988 and led U.S. trade negotiations with Japan, South Korea and other Asian nations. In 2015, she left the USTR and became vice president of the Asia Society Policy Institute. Jiji Press