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U.S., Japan lay out plan for trade talks

April 12, 2013|By Don Lee
  • Japan, the world's third-largest economy, is expected to join 11 other nations in talks for a free-trade pact.
Japan, the world's third-largest economy, is expected to join 11… (Yoshikazu Tsuno / AFP/Getty…)

WASHINGTON -- Japan moved closer Friday to joining the negotiations for an Asia-Pacific free-trade pact as it concluded preparatory talks with the U.S. that highlighted key sticking points that could delay an agreement among the dozen trading nations.

Last month, Japan announced its desire to take part in the emerging Trans-Pacific Partnership, a wide-ranging and ambitious effort involving the U.S., Canada, Mexico and eight other countries.

President Obama has welcomed Japan's participation, as the world's third-largest economy would add greater heft to a pact that, for Washington's part, is aimed at enhancing U.S. economic and geopolitical interests in the Asia-Pacific region. With Japan, the so-called TPP nations account for nearly 40% of the global economy and one-third of world trade.

But some key Democratic lawmakers, joined by domestic automakers and labor unions, have looked warily at Japan's entry because of longstanding concerns, particularly over Japan's auto market.

On Friday, Japan and the U.S. announced that the two sides would tackle a wide array of non-tariff measures, particularly involving Japan's auto and insurance markets, in bilateral talks parallel to the TPP negotiations. Japan also agreed that U.S. tariffs on imports of Japanese vehicles would be phased out over the "longest staging period" for any product in the TPP negotiations -- a choice that Japan's auto industry association called "regrettable."

Also, in a good-will gesture of sorts, Japan announced Friday that it would more than double the number of cars that it could import under a simpler and faster certification method.  

The U.S. trade representative's office said Friday that it was pleased that the preparatory talks produced "a robust package of actions and agreements with Japan, and as a result, the United States has successfully concluded its consultations."

Critics of Japan's trade and economic policies were far from satisfied with what was announced Friday. Sen. Sherrod Brown (D-Ohio) did not even acknowledge the actions Japan agreed to take involving the auto market, instead repeating numerous complaints he has raised over the years about what he sees as Japan's unfair trade and currency policies. The Japanese yen has fallen sharply against the dollar since late last year, something that U.S. officials are monitoring.

The American Automotive Policy Council, which represents the Big Three domestic car makers, said: "After all the sacrifices made by taxpayers, autoworkers, dealers, suppliers and other stakeholders that resulted in a necessary restructuring of the American auto industry, it is stunning that the U.S. government would endorse a trade policy that puts the industry at a competitive disadvantage and comes at the cost of American auto jobs."

Other business associations and pro-trade groups, however, welcomed Japan's entry. The momentum favors an eventual passage of the TPP.

Edward Gerwin, a trade specialist at Third Way, a Democratic think tank, called Friday's announcement a positive development that would add Japan's $4-trillion economy to the TPP, although he added that Japan "can't significantly slow down or water down the eventual agreement."

With the preparatory bilateral talks over, the Obama administration is expected soon to give notice to Congress of Japan's entry in the TPP negotiations, starting a 90-day period during which lawmakers and others can air their concerns. That means the earliest Japan can enter the talks is late July, making it highly unlikely that a TPP agreement will be concluded this year.

Japan is the United States' fourth-largest merchandise trading partner. Last year, Japan's goods exports to the U.S. topped $142 billion, up from $95.3 billion in 2009, according to figures from the International Trade Center in Geneva. By far, the biggest exports to the U.S. were cars and car parts, which exceeded $47 billion, although some of those goods were engines and other car parts shipped to Japanese auto plants in the U.S.

Japan's imports from the U.S., meanwhile, totaled $78.3 billion last year, up from $60.6 billion in 2009, according to the International Trade Center. Japan's imports of American cars have tripled since 2009, but the total was still just $784 million in 2012, less than Japanese purchases of American cigars and cigarettes.


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