Shinzo Abe has courted the American president but he cannot escape the logic of “America first”by David Warren / April 16, 2019 / Leave a comment
Nearly two and a half years after the election of President Trump, the sequence of negotiations initiated by him to tackle the US trade deficit has finally worked its way round to Japan—the US’ main ally in the Asia-Pacific region and the third largest economy in the world after the US and China, but a country with which the US has a $67bn trade deficit.
Prime Minister Shinzo Abe has put enormous effort into the relationship with Donald Trump, positioning Japan as the US’ key security partner in the region and Japanese investment in the US as central to American economic regeneration. But all the games of golf and weekends at Mar-a-Lago do not erase Trump’s long pre-election history as a critic of Japanese trade practices and of alleged Japanese free-riding on the US defence presence in east Asia. He has never made any attempt to play down his mercantilist instincts. Nor has Japan ever had illusions that it would avoid being placed in the firing line. Trump’s domestic electoral priorities of “America First” and the need to challenge the US’ trading partners, whether ally or adversary, were always going to win out.
It will not, however, be a straightforward process. Firstly, US attention at the moment is on finalising the deal with China, where March and April deadlines have already slipped several times. With arguments over whether the enforcement mechanism for the agreement should be reciprocal—and expose US companies to Chinese challenges—and the US trying to leverage fundamental structural changes in the Chinese economy, there are big issues unresolved. A US-driven trade war in east Asia on two fronts simultaneously does not make enormous sense.
And the Japanese negotiators will want to proceed step by step. First, there has to be agreement on the scope of the negotiations. Japan will want to limit these to trade in goods. The US will want to include services, particularly telecommunications, finance and intellectual property. Treasury Secretary Steven Mnuchin has said that currency manipulation must also be included, as in previous bilateral agreements with trade partners under the Trump administration. Japan’s starting point will be that the US is the demandeur in these talks: it is for them to set out what they want and what they might be prepared to…