Bilateral talks on tariffs between America and Japan agreed by Trump and Abe

Bilateral talks on tariffs between America and Japan agreed by Trump and Abe

Chika Mori and Lee Jay Walker

Modern Tokyo Times

Prime Minister Shinzo Abe of Japan agreed to enter bilateral talks with America based on economic pressure from President Donald Trump. The tradeoff, so to speak, is that proposed high tariffs on auto imports from Japan and other areas of contention will be put on hold during new talks between both nations. However, the price of this for Abe is that Japan will focus on a bilateral approach, rather than the preferred multilateral approach that is deemed in the best interest of Japan.

Abe had hoped to entice America back into the multilateral agreement of the Trans-Pacific Partnership (TPP). Yet, Trump favors the bilateral approach with nations based on this being in the interest of America. Of course, Trump is open to trade blocs that are flexible to the demands of America. Despite this, it is clear that Abe can’t entice Trump to re-enter the TPP. Hence, with Japan agreeing to bilateral talks, even if Abe claims that the nuance is different, it is clear that the path to a free trade bilateral agreement between both nations is taking shape.

Trump, in a veiled threat hidden by a wry smile, notified people, including reporters, that America expected economic results that would be more favorable than in the past. Therefore, Trump stipulated, “I’m sure that we’ll come to a satisfactory conclusion. And if we don’t…”

Abe, understanding the determination of Trump, and seeking to quell tariffs on autos and other areas in Japan, reluctantly agreed to bilateral trade talks by putting a spin on the nuance. Yet, like Trump stipulated, “This was something that, for various reasons over the years, Japan was unwilling to do, and now they are willing to do so.”  

Reuters reports, “Tokyo pushed back on a straight bilateral Free Trade Agreement (FTA) that Washington had sought. The latest framework appeared designed to allow both parties to save face: Abe avoids the worst-case scenario of an imminent 25 percent tariff on cars, while Trump claims victory for getting Japan to a two-way negotiating table.”

Overall, it looks like Japan obtained conditions that are favorable in the short-term from Abe’s point of view. Yet, in the long-term, America’s foot is firmly inside the bilateral door and if Japan drags its feet then the Trump administration will up the ante.

https://www.reuters.com/article/us-usa-trade-japan/japan-dodges-u-s-auto-tariffs-for-now-as-trump-and-abe-agree-on-trade-talks-idUSKCN1M62Q9

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