USA pushes for new free trade agreement with Japan

Industry News | 20 March 2019

The US wants trade talks with Japan, but its conditions may cause friction.


US president Donald Trump has said he is keen to push through a new free trade agreement with Japan in order to open up the country's agricultural market.

In the US Economic Report of the President submitted to Congress this week, he confirmed that he intends to "enter into free trade agreement negotiations with Japan" and called for a comprehensive pact that would cover goods, services, investment and currency.

Mr Trump referred to Japan's tariffs on beef and pork in the report and pointed out that "a number of international competitors, such as Australia, face much lower Japanese tariffs, so a free trade agreement with Japan could level the playing field for US exporters".

The news comes after US trade representative Robert Lighthizer said last month that he hoped the two governments would be able to launch trade talks in March, although this looks less likely now the US has turned its focus towards China.

Mr Lighthizer also said he was concerned that the recent enforcement of the Trans-Pacific Partnership and a free trade deal between Japan and the European Union could put American farmers and ranchers at a disadvantage.

Japan has been seeking to bring the US back into some kind of Pacific regional trade deal, but was forced to agree to bilateral talks last September after Mr Trump threatened higher tariffs on its lucrative car exports. 

The Japanese economy minister Toshimitsu Motegi recently said he is keen to begin negotiations, but added it is "not necessarily correct" that their content would include currencies and exchange rates.

However, Mr Lighthizer has hinted he will bring up currency issues, meaning they will go beyond a goods-focused deal envisaged by Tokyo.

The trade representative said there are places in Asia where currency manipulation has been a problem, which may suggest any trade deal could include measures to stop competitive devaluation.

Japanese chief cabinet secretary Yoshihide Suga told reporters the nation anticipates "constructive discussions toward a mutually beneficial relationship, based on the Japan-US joint statement from last September".