U.S. Insists on Bilateral Deal

Deputy Prime Minister, and Minister of Finance, Taro Aso, had the first meeting of Japan-United States Economic Dialogue with U.S. Vice-President, Mike Pence, in Tokyo on Tuesday. Against Japan’s hope to maintain multi-lateral international framework for free trade in Asia-Pacific region, or Trans-Pacific Partnership, Pence unequivocally dismissed TPP as obsolete concept and demanded bilateral deal with Japan. Aso could do nothing but reiterating basic principle of free and fair trade.

Prime Minister Shinzo Abe and President Donald Trump agreed in February on the mission of Economic Dialogue as discussing common strategy on the rule of trade and investment, cooperation in economy and partial cooperation including infrastructure. Reconfirming the framework of dialogue, Aso and Pence agreed on taking China’s over-production of steel or measures for growth of world economy including fiscal mobilization, monetary easing and structural reform as the agenda.

The greatest disagreement loomed up over the framework of trade. To a question about U.S. withdrawal from TPP in the press conference, Aso insisted on the responsibility of both Japan and U.S. “Having a good understanding about the situations underway in the Asia-Pacific, it’s important that Japan-U.S. should lead the rulemaking process in the region,” said Aso. He tried to keep U.S. in the framework of rulemaking against Chinese economic advance in the region.

The answer of Pence was totally different. “Let me say with great respect to those who worked on the Trans-Pacific Partnership in the past, the TPP is a thing of the past for the United States of America,” said Pence. “Forget it” was what he wanted to say. Pence reiterated the principle of Trump administration, America’s interest first, and argued that the principle could lead the deals to a win-win arrangement.

Trump administration has been facing hard pressure from agricultural groups. Australian beef is flowing into Japanese market, excluding U.S. beef, with low price, based on Japan-Australian Free Trade Agreement. Japan-European Union Economic Partnership Agreement, possibly being concluded by the end of this year, may cause damage on U.S. pork to Japan. U.S. is serious for making steps forward in the trade with Japan.

Japan’s strategy toward U.S. was something naïve. The officials in Japanese ministries thought that they could lead the dialogue by setting agenda, including cooperation n high-speed railway, in advance. It was U.S. that insisted on bilateral deal later. Unexpected guest, Secretary of Commerce Wilbur Ross, had a meeting with Minister of Economy, Trade and Industry in the framework of the bilateral dialogue, getting into the substance of bilateral deal. For Japan, the future of international trade is too opaque to see through.