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Nikkei Editorial

Japan, US must not miss this chance for constructive trade talks

Abe cannot allow Trump to use tariff threats as a policy tool

Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump at their meeting in New York on Sep. 26   © Reuters

The latest summit between Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump saw the leaders agree to launch talks on a bilateral "Trade Agreement on Goods." The Sept. 26 meeting in New York was their first since Abe's re-election to a third straight term as president of the ruling Liberal Democratic Party.

For Abe, whose third and final stint as LDP chief means he will serve as premier through September 2021, maintaining a stable Japan-U.S. relationship is a crucial task. The Trump administration has imposed high tariffs on steel and aluminum products shipped from Japan and other nations, and has also been weighing a similar move for Japanese autos. Should Trump continue on this tack, the stability Abe so keenly wants will be difficult to preserve.

At their meeting, the two leaders decided to start bilateral talks on tariffs covering a broad range of goods, including farm products and industrial items. According to the Japanese government, the U.S. will not impose hefty tariffs on Japanese automobile imports while the TAG talks are underway.

An inescapable question for Japan is what type of trade relationship it should forge with the U.S., which withdrew from the Trans-Pacific Partnership agreement within days after Trump took office. We hope Tokyo and Washington take this opportunity to craft constructive measures for promoting exports and imports between the two countries. By doing so, they can create a model for how trade talks should be conducted.

The two sides should look to forge an agreement that follows the standards and rules set by the TPP, which calls for a high degree of trade liberalization. A high-quality TAG, if realized, would make Japan a more attractive partner for free trade blocs and also bring the U.S. such economic benefits as increased exports of its farm products.

Abe and Trump agreed that market liberalization steps for American exports of farm goods to Japan would not go beyond those set under past economic partnership agreements concluded by Japan. That is a pragmatic approach and one that is likely to facilitate their TAG negotiations.

What is worrying, however, is that the Trump administration tends to resort to managed trade solutions. In its free trade agreement talks with South Korea and renegotiations of the North American Free Trade Agreement with Mexico, Washington forced the two trading partners to accept quantitative restraints on exports to the U.S., among other demands.

The U.S. must not be allowed to use the threat of steep tariffs on Japanese autos as a way to force Japan to introduce quantitative restraints on exports, set numerical targets for imports or more strictly monitor foreign exchange rates. That is simply unacceptable. Washington should call off all existing and planned punitive tariffs, including the additional levies on steel and aluminum, and proceed with the TAG talks in a way that follows the principles of free trade.

The U.S. and Japan -- the world's largest and third-largest economies -- have a responsibility to work for global economic stability. For now, what is most important is that the U.S. show restraint as it forges a protectionist path under Trump's "America first" policy. Japan, for its part, must tirelessly urge Washington to correct its policy course.

In the same vein, Japan and the U.S. should discuss reforms to the World Trade Organization. We welcome the fact that Japan, the U.S. and the European Union have agreed to have their trade ministers work out a joint proposal for WTO reform in November.

The WTO, Japan, the U.S. and the EU also need to work together to urge China to address its intellectual property violations. It is vital to make efforts to anchor the U.S. to international organizations and rules by deepening such cooperative relationships.

Japan should therefore strive to put the "TPP 11" -- that is, the TPP minus the U.S. -- and a Japan-EU EPA into effect as soon as possible, and also expedite efforts to wrap up the negotiations on the 16-member Regional Comprehensive Economic Partnership free trade pact. There is no time to waste in building these bulwarks against trade protectionism. Japan therefore cannot allow itself to focus on the talks with Trump administration to the exclusion of all else.

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