Nikkei Asian Review | 25 October 2019
Japan braces for US pressure on services in next trade talks
by RINTARO TOBITA
TOKYO — Even as Japan’s parliament began debate Thursday on a partial trade deal with the U.S., attention has turned to the next phase of talks, where Washington is likely to press for greater market access in financial and other services.
Many lawmakers focused their questions on those future negotiations, which will determine whether Washington scraps its 2.5% tariff on Japanese vehicles — a top priority for Tokyo. Auto parts are expected to be on the agenda as well.
"I have no intention of making an agreement that goes against our national interests," Prime Minister Shinzo Abe told a lower house member when asked about his government’s plans.
The September agreement now under consideration by parliament would reduce or eliminate tariffs on agricultural and industrial goods on both sides. The scope of the next round of talks will be set in the spring, and Washington appears to have something broader in mind.
"In the fairly near future, we’re going to be having a lot more very comprehensive deals signed with Japan," U.S. President Donald Trump said last month at a signing ceremony for the mini-agreement.
How Trump will approach these talks remains a matter of concern in Tokyo.
"The U.S. side considers the negotiations on trade in goods such as agricultural products to be over, and it’s moving on to topics like drug price revisions and opening up services markets," said Chubu University professor Masahiko Hosokawa, a former trade official.
The Office of the U.S. Trade Representative released late last year a summary of negotiating objectives spanning 22 areas, including currency policy, telecommunications and financial services, and drugs and medical devices. It also called for stronger intellectual property protections, a ban on special treatment for state-owned enterprises, and cooperation on rules governing food safety.
If the two sides keep negotiations within the agreed-to terms of the Trans-Pacific Partnership trade pact, as was largely the case with the initial deal, "there won’t be any major problems," said Yorizumi Watanabe, professor of international political economy at the Kansai University of International Studies.
The U.S. announced its withdrawal from the TPP after Trump took office in 2017, before the trade pact could even take effect.
Abe’s government aims for the ratification bill on the partial deal to pass Japan’s lower house in early November.
Even if the scope of the next negotiations is set in the spring, the actual talks may not start in earnest until 2021 or beyond. Trump is expected to focus on getting results with the European Union or China in the run-up to the U.S. presidential election of November 2020 to help his prospects of winning a second term.