New Negotiation on Economy

The biggest headline about the first official meeting between Japanese Prime Minister Shinzo Abe and United States President Donald Trump was about economy. “Japan and U.S. Establish Economic Dialogue” was a common headline on front page of Japanese newspapers. While the result was drawn by Japan’s strategy for not letting uncontrollable U.S. President be involved in direct negotiation on trade deals, future of economic dialogue is still invisible.

Trump had been a hardliner on business deals with Japan. He tweeted to demand construction of Toyota factories in U.S., indicating possibility of introducing border tax earlier this year. He decided withdrawal from Trans-Pacific Partnership, leaving Japan still promoting the free trade deal. In the meeting with U.S. businessmen, Trump criticized Japan’s monetary policy as devaluating its own currency.

Nevertheless, Trump seemed have been as meek as a lamb in the meeting with Abe. Both leaders agreed on enhancing bilateral or regional economic relationship based on free and fair trade rules. Trump did not directly refer to actual demand on economic policy in forty-minute meeting. “The President and the Prime Minister reaffirmed their commitments to using the three-pronged approach of mutually-reinforcing fiscal, monetary and structural policies to strengthen domestic and global economic demand,” noted the Joint Statement.

The new framework of economic dialogue will be led by each administration’s number two, Deputy Prime Minister and Minister of Finance, Taro Aso, and Vice-President, Mike Pence. They will deal with three topics: fiscal and monetary policy, cooperative project on infrastructure or energy, and bilateral trade framework. Although the dialogue does not exclude discussing bilateral trade framework such as free trade agreement, Abe administration expects Trump coming back to TPP through discussion over the merit of the high-level free trade pact.

The economic relationship of both countries is still not foreseeable. Trump did not stop accusing devaluation. “As far as the currency devaluations, I’ve been complaining about that for a long time. And I believe that we will all eventually – and probably very much sooner than a lot of people understand or think – we will be all at a level playing field, because that’s the only way it’s fair,” told Trump in joint press conference at White House. Abe insisted on TPP for free and fair common set of rules, arguing that importance had not changed. New negotiation has just begun.