US, Japan agree to negotiate a free trade agreement

The United States and Japan announced Wednesday they will open negotiations on a bilateral trade agreement between the world’s first- and third-largest economies.

It’s a significant shift by Tokyo which has been a strong advocate of a multi-nation trans-Pacific trade pact that President Donald Trump withdrew from soon after taking office.

Trump made the announcement after meeting with Japanese Prime Minister Shinzo Abe in New York on the sidelines of the U.N. General Assembly.

He said that Japan had been unwilling in the past to enter into such talks, but now is and such a deal “will be something very exciting.” 

Abe has cultivated close ties with Trump since after his 2016 election but trade relations have been difficult, since the Republican president withdrew from the 12-nation Trans-Pacific Partnership, or TPP, that had been negotiated by the Obama administration and championed by Abe despite considerable domestic political opposition in Japan.

The Trump administration, pushing to narrow the U.S. trade imbalance with Japan, has since imposed steel and aluminum tariffs on its ally. The U.S. has also been threatening to impose higher tariffs on auto imports that would have escalated trade tensions significantly.

A joint statement said that the United States is seeking more access to the Japanese auto market and that the Japanese won’t go beyond any previous commitments to open their protected agriculture market. “It’s a line in the sand” from Japan, said Ted Murphy, a partner at the law firm Baker McKenzie. “You guys think auto are important. We think agriculture is important.”

The statement suggests the United States will hold off on threatened tariffs on Japanese autos “during the process of these consultations” and “will make efforts” to resolve differences over U.S. tariffs on imported steel and aluminum.

Murphy said he suspects that Japan dropped its objections to bilateral trade talks with the United States after seeing Mexico agree to a trade deal with Washington last month.

“We’ve agreed today to start trade negotiations between the United States and Japan,” Trump told reporters, alongside Abe.

“This was something that for various reasons over the years Japan was unwilling to do. And now they are willing to do. So we’re very happy about that. And I’m sure they will come to a satisfactory conclusion,” he said.

Abe said that Japanese Economy Minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer had held very productive discussions in New York this week. Abe said he wanted to find “ways to reinforce the economic ties between Japan and United States.”

The joint statement issued said negotiations will begin after completion of necessary domestic procedures in each country.

Lighthizer told reporters that he would be talking to Congress on Thursday about seeking trade promotion authority for the president to negotiate the agreement.

The statement said the proposed agreement will cover goods, and other key areas including services, that can produce “early achievements.” The U.S. and Japan would then negotiate on other trade and investment items.

The TPP has proceeded without the U.S., and in his speech to the U.N. on Tuesday, Abe described himself as a “flag-bearer for free trade,” and said “there has been no greater joy for me” than when it was approved by Japan’s parliament. He also pointedly noted that Japanese investment supports 850,000 jobs in the U.S. and that 3.8 million Japanese cars are manufactured annually in the U.S., more than double the number it imports into the country.

At Wednesday’s meeting with Trump, Abe credited the U.S. president with a “major transformational change” in relations with North Korea after his June summit with Kim Jong Un. He also thanked Trump for congratulating him on his re-election last week as head of his ruling Liberal Democratic Party, clearing the way for up to three more years as Japan’s leader. 

Trump and Abe also met privately over dinner Sunday at Trump Tower after the president arrived in New York.

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Associated Press writers Paul Wiseman, Darlene Superville and Zeke Miller contributed to this report.

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