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Tokyo and Washington face critical alliance challenge

Trade disagreements must not be allowed to obstruct vital relationship

The Asia-Pacific region is being confronted by large-scale geopolitical change and immediate security threats. The U.S.-Japan alliance is the cornerstone of American strategic engagement in Asia and will be critical to maintain peace, prosperity and stability in the region. As Tokyo and Washington jointly confront acute and long-term challenges -- North Korea's weapons programs, China's increasing assertiveness, escalating maritime disputes and the unraveling of long-held views on international economics and institutions -- cooperation between the two nations will be even more critical.

Japanese Prime Minister Shinzo Abe's cabinet reboot in early August is a positive step in shoring up his political position and in advancing a forward looking bilateral agenda on diplomatic and security issues. However, beneath the surface, economic and trade disputes loom that have the potential to sour the relationship and derail strategic efforts on energy cooperation, cybersecurity, regional infrastructure development and other emerging initiatives that will dominate the 21st century.

As the future of the Asia-Pacific region is being written at this moment, it is incumbent on U.S. and Japanese officials to use upcoming meetings such as a joint Security Consultative Committee meeting starting on Aug. 17, to establish a more formal and robust framework to address bilateral disputes and ensure they do not disrupt ambitious cooperative programs that benefit the U.S., Japan and the region,

The resilience of the U.S.-Japan relationship was reaffirmed early in the administration of U.S. President Donald Trump. Notwithstanding past negative comments by the president on Japan and U.S. alliances, Trump and Abe took important early steps to strengthen the relationship. At their first leader meeting, at Trump's Mar-a-Lago estate in Florida, the president agreed to Abe's proposal to establish an economic dialogue under the leadership of U.S. Vice President Mike Pence and Japanese Deputy Prime Minister Taro Aso.

Despite the good intentions, the economic dialogue has itself become a source of bilateral friction. Macroeconomic discussions have barely commenced. On trade, the U.S. is pushing for Japan to negotiate a bilateral trade agreement. Japan, for its part, is pursuing an 11-nation version of the Trans-Pacific Partnership trade agreement, from which Trump withdrew the U.S. early in his presidency.

Japan hopes that Washington will rejoin the TPP in the future (a concept that is anathema to the Trump administration). Japan's government is divided over discussing a bilateral trade framework with the U.S., and some in Tokyo argue that they have plenty of time to debate the issue given the U.S. focus on renegotiating the North American Free Trade Agreement with Canada and Mexico and the U.S.-Korea Free Trade Agreement with South Korea.

Policy paralysis?

Finally on sectoral issues, Washington and Tokyo are fixed on starkly different outcomes, causing bureaucratic paralysis and disappointment on both sides. Japanese officials argue that sectoral discussions should focus on regional norms and programs -- a TPP without the trade. Meanwhile, the U.S., led by the Commerce Department, prioritizes bilateral trade and investment frictions. As the Trump administration is particularly attuned to trade deficits and U.S. industry concerns, individual company complaints and Japanese regulatory actions can quickly escalate to senior U.S. official levels. If these trade frictions are not addressed, it may be difficult to sustain political will for the cooperative areas of the dialogue -- essentially, some officials could argue that it is beneficial for the U.S. to withhold positive outcomes to maintain pressure on Japan over trade disputes and the negotiation of a trade agreement.

Abe maintained a high degree of economic personnel continuity in the reshuffle -- retaining key figures such as Aso and Minister of Economy, Trade and Industry Hiroshige Seko, while adding economic heavyweights like Katsunobu Kato as minister of Health, Labor and Welfare and Toshimitsu Motegi as minister in charge of Economic Revitalization. Japan's economic team members should work with their U.S. counterparts to double-down on the economic dialogue by creating formal interagency sub-dialogues tasked with driving toward concrete outcomes.

This working-level structure could ensure that issues are diligently addressed, providing regular reports on progress and identifying roadblocks that need to be addressed at the political level. As U.S. trade disputes with China come to the fore, Washington and Tokyo should avoid unnecessary economic contention.

Important steps on defense

Meanwhile, Abe's reshuffle has put the defense and diplomatic relationship on firmer footing, with the immediate threat posed by North Korea likely to bring the U.S. and Japan closer together. Abe has taken important steps over the past several years toward allowing Japan to be a better defense partner to the U.S., including revising the so-called collective self-defense policy in potential North Korean scenarios. As in the U.S., it is essential for the civilian defense leadership to be above reproach to maintain the confidence of the public and troops. The early resignation of Defense Minister Tomomi Inada after a political gaffe, and the appointment of the seasoned Defense Minister Itsunori Onodera were important steps to restore confidence that the Abe government seeks a nonpolitical Self-Defense Force, able to partner with the U.S. in mutual defense and participate in overseas humanitarian efforts.

In the diplomatic realm, new Foreign Minister Taro Kono is a long-time friend of the U.S., having studied at Georgetown University and maintained a large network of American friends. As the U.S. and Japan confront North Korean belligerence, maintaining solidarity between the U.S., Japan and South Korea will be vital. At this moment, there is divergence between Washington and Seoul on the behavior of North Korea, with the Trump administration pushing isolation and heated rhetoric while the South Korean government of President Moon Jae-In seeks dialogue with the North and worries about U.S. military action.

Japan can play a key role. Kono, whose father, Chief Cabinet Secretary Yohei Kono, achieved a diplomatic breakthrough in a long dispute between Japan and South Korea over so-called "comfort women" in World War II, has unique credibility for a fresh attempt to improve rocky Japan-South Korea relations and forge trilateral cooperation. Kono's trilateral meeting with U.S. Secretary of State Rex Tillerson and South Korean Foreign Minister Kang Kyung-wha in Manila on Aug. 7 was a positive first step, and should be followed up with greater trilateral threat information sharing and coordinated responses to North Korean actions.

With Kono and Onodera traveling to Washington on Aug. 17 for talks with Tillerson and U.S. Defense Secretary James Mattis, there will be a full agenda of immediate and longer-term challenges. At the top of the list will be raising international pressure on North Korea and sustaining operational readiness. Additionally, the four should discuss how to best respond to Chinese actions in disputed waters and Beijing's increasing use of economic coercion.

Beyond a reactive agenda, however, the meeting could lay the groundwork for a constructive agenda to position the U.S. and Japan as leaders on Asia-Pacific integration. The early focus should be on supporting an Asia-Pacific transition to cleaner fuels such as natural gas and greater utilization of advanced clean energy solutions from the U.S. and Japan. Additionally, it is in U.S. and Japanese interests to expand cyber security cooperation dramatically with Southeast Asia.

The internet increasingly brings the countries of the Asia-Pacific region closer together in communications, commerce, and knowledge-sharing. At the same time, it exposes all of us to greater vulnerabilities -- from personal data theft to interference in democratic societies. The U.S. and Japan also should look for opportunities to respond to the massive infrastructure demands of the region while expanding cooperation with other key countries, such as Australia, India and Vietnam, recognizing that a networked region is necessary to confront shared challenges.

A stable and productive U.S.-Japan relationship is more important than ever given the rapidly shifting dynamics in the Asia-Pacific region. Abe's reshuffle provides an opportunity not only to reinvigorate his Abenomics agenda at home, but also to expand cooperation with the U.S. to set the terms for the Asia-Pacific region in the 21st century. What is required now is to ensure that trade disagreements do not prevent Americans and Japanese from building the cooperative leadership necessary for the diplomatic, security, and economic challenges we face.

Brian Andrews is a partner at The Asia Group. He previously served in the U.S. State Department (2008-13), specializing in Asia policy.

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