Trade issues hang over Abe’s meeting with Trump
The Japanese prime minister has a raft of trade issues to put on the table when he meets with the US president. Will Trump throw Abe a bone?
Donald Trump threw a bone to Japanese Prime Minister Shinzo Abe just ahead of their April 17-18 summit at Mar-a-Lago when the US president said he would consider rejoining the Trans-Pacific Partnership (TPP) that Abe had salvaged after Trump’s abrupt withdrawal from the pact last year.
But Trump seemed to undermine that goodwill gesture when he later tweeted: “Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama. We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”
Trump has made his displeasure known about Japan in recent months. Japan was left out of exemptions that were granted to US allies after Trump imposed sweeping tariffs on global steel and aluminum imports. Trade insiders in Washington, DC, said the reason was that Tokyo was resisting talks on a bilateral trade deal.
A year ago, Abe thought he was Trump’s best buddy among world leaders after he became the first head of state to rush to Trump Tower to congratulate the new US president after his election. But since then, the President Trump has surprised Tokyo on issues ranging from North Korea to trade, which has called that assumption into question.
Whether the forthcoming Trump-Abe meeting will smooth out recent differences and restore their bromance remains uncertain. Although Abe asked for the meeting in the wake of Trump’s decision to hold a summit with North Korean leader Kim Jong-un, the US president has now highlighted that bilateral trade relations could emerge as an equally important topic.
That point was driven home in the White House statement announcing the summit when it said Trump and Abe “will explore ways to expand fair and reciprocal trade and investment ties between the United States and Japan, two of the world’s wealthiest and most innovative economies.” In some ways, Trump appears to be reviving his criticism of Japan that he made in the 1980s when he said that its trade policies had “systemically sucked the blood out of America” and proposed slapping a 20% tariff on Japanese imports into the US.
Tokyo is also worried that Trump appears to be adopting a weak-dollar policy to boost US exports. This threatens Abe’s own reflation strategy based on a weaker yen to increase exports and corporate profits.
Nonetheless, the outlines of a trade deal could be in the making. In return for Tokyo making unspecified trade concessions, Trump might press ahead with rejoining TPP. He told US lawmakers last week that he had instructed Larry Kudlow, the National Economic Council director, and Robert Lighthizer, the US Trade Representative, to look at negotiations for a US entry into TPP.
Japanese trade concessions would give Trump the political cover he needs to re-enter TTP, which he castigated during his presidential campaign as ‘a continuing rape of our country’ before pulling the US out of the trade deal just days after he took office
Japanese trade concessions would give Trump the political cover he needs to re-enter TTP, which he castigated during his presidential campaign as “a continuing rape of our country” before pulling the US out of the trade deal just days after he took office.
The reason for Trump’s possible reversal on TPP is that he recognizes he needs the support of other nations in the Asia-Pacific region in isolating and challenging China over its trade practices, including violation of intellectual-property rights, forced technology transfers and auto tariffs.
Trump has already signaled that he might accept such a trade-off. His administration recently agreed to continue the US-Korea free-trade agreement after Seoul made only modest concessions to a pact that Trump once described as a “job killer.”
If Trump is seeking to build a “trade coalition of the willing” against China and placing Tokyo at the center of that effort, it would reassure Abe about the continuing strength of the US-Japanese alliance.
Many trade experts believe that some of the 11 remaining TPP member states might demand new concessions for US entry. But Japan would try to overcome such objections, since it would be in its interest to secure US participation.
Japan was the driving force behind the effort to rescue TPP after the US withdrawal last year. The revised TPP agreement, called the Comprehensive and Progressive Trans-Pacific Partnership, was signed in Chile on March 8, the same day that Trump announced he was willing to meet Kim Jong-un. That move caught Abe by surprise and added anxiety in Tokyo about its relations with Washington.
Abe has adapted a hawkish stance on North Korea and is believed to oppose a Trump-Kim summit. It was the main reason he asked for this week’s meeting with Trump. If the US is seen as standing shoulder-to-shoulder with Tokyo in resisting China’s growing economic power, it could counter Abe’s concerns that Japan is losing its influence in the region.
Abe is said to be particularly upset that Trump decided to go ahead with the Kim summit with the encouragement of South Korea and without consulting Tokyo. This would appear to go against a long-standing principle that the US, South Korea and Japan would cooperate closely on how to deal with North Korea.
The White House appeared to make amends to Abe when it said that the Japanese prime minister’s meeting with Trump would “reaffirm the United States-Japan alliance as a cornerstone of peace, stability, and prosperity in the Indo-Pacific region. The two leaders will discuss the international campaign to maintain maximum pressure on North Korea” ahead of the Trump-Kim summit.
But Abe is likely to remain concerned that Trump still might strike a deal with Kim that would leave Japan exposed to a North Korean threat. This includes its short-range missile force that might be absent from the Trump-Kim negotiations, which are likely to focus on Pyongyang’s nuclear and long-range-missile programs.