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Trade war

US demand for auto export restrictions rattles Japan

Quantitative limit would violate WTO rules, Tokyo says

The U.S. move is aimed at both Japan and the EU, which also opposes the restrictions.   © Reuters

TOKYO/WASHINGTON -- Tokyo is anxiously watching if Washington attempts to introduce quantitative restrictions on the import of Japanese autos, a move American media said U.S. President Donald Trump is mulling in lieu of tariffs.

Bloomberg reported that Trump is preparing an executive order requesting Japan and the European Union to limit auto exports to the U.S. The order would grant the two 180 days to come up with a plan to cap exports in exchange for the U.S. not levying a 25% auto tariff.

Both Tokyo and Brussels oppose the restrictions.

Auto tariffs are the most contentious issue in Japan-U. S. trade talks. Trump is trying to invoke national security to justify the tariffs, and is required to make a decision by Saturday.

Tokyo argues that quantitative restrictions would violate World Trade Organization rules and will strongly oppose them.

The draft of the executive order shown to Bloomberg also reportedly exempts South Korea from the tariffs because Washington and Seoul have already renegotiated a bilateral free trade agreement.

Following the news, shares of Toyota Motor and Honda Motor were down about 1% in Tokyo on Thursday afternoon. In South Korea, Hyundai Motor was unchanged while Kia Motors was up 1.4%.

Japanese Chief Cabinet Secretary Yoshihide Suga said on Thursday that he is aware of the Bloomberg report but declined further comment.

Tokyo and Washington have been negotiating a trade agreement as Trump tries to address a $67-billion trade deficit with Japan, the fourth-largest trade gap after China, Mexico and Germany.

The U.S. has been losing market share to members of the Trans-Pacific Partnership, a regional free trade framework among 11 Pacific-rim countries, including Australia, Canada and Mexico. Trump withdrew from the TPP after taking office in 2017.

Tokyo and Washington have agreed to prioritize market access for agriculture and automobiles in their negotiations.

Trump is set to visit Japan on May 25-28 to meet with Emperor Naruhito, who assumed the throne on May 1. In late June, the president will again visit Japan as well as South Korea when he attends the Group of 20 summit in Osaka on June 28-29.

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