WASHINGTON -- In the latest round of Japan-U.S. trade talks on Thursday and Friday in Washington, the United States called for launching negotiations on a bilateral trade deal, illustrating its position to rush concrete outcomes in preparation for the U.S. midterm elections in November.
Washington apparently aims to demand that Tokyo considerably open its market for beef and other agricultural products, likely provoking a series of fierce battles between the two governments.
"As we discussed quite a wide range of topics, it's necessary to summarize the points of contention again," Toshimitsu Motegi, minister in charge of economic revitalization, said at a press conference after Thursday's meeting, explaining why the two sides decided to extend the talks to Friday.
The decision was made not because the meeting went badly but because they hoped for a constructive discussion, he said.
Japan is very wary that the United States may go on the offensive in the agricultural and automobile sectors.
At a Senate committee hearing in late July, U.S. Trade Representative Robert Lighthizer pointed to "unfair barriers" that he alleged were imposed by Tokyo on U.S. exports in wide-ranging sectors, including beef, calling for Japan to expand beef imports.
Japan is the largest importer of U.S. beef. The United States provides about 40 percent of Japan's beef imports, after Australia at 52 percent.
As the revised Trans-Pacific Partnership (TPP) free trade pact -- which was signed by 11 countries including Japan and Australia -- is increasingly expected to enter into force at an early date, a sense of urgency has been mounting among U.S. producers.
The coming into force of the TPP will gradually lower Japan's tariff on Australian beef, eventually to 9 percent. The United States, which withdrew from the TPP, cannot receive such a benefit, with Tokyo's tariff on U.S. beef staying at 38.5 percent.
Meanwhile, China and Canada have imposed additional tariffs on U.S. beef as a retaliatory step against U.S. tariff measures, causing dissatisfaction among the livestock industry and other relevant sectors in the United States. American farmers are also having a hard time as soybeans are subject to China's retaliatory tariff.
In light of such circumstances, the administration of U.S. President Donald Trump announced in July a decision to provide up to 12 billion dollars (about 1.3 trillion yen) to help these farmers. The administration is desperate to maintain the support of domestic agricultural organizations with the midterm elections in mind.
Tokyo is in a position to refuse a compromise. A senior official of the ruling Liberal Democratic Party said, "The United States has caused a disadvantageous situation on its own by withdrawing from the TPP."
But the Trump administration is also considering further tariff measures on imported automobiles.
Toyota Motor Corp. exports about 700,000 units to the United States annually. If Washington raises tariffs on imported automobiles to 25 percent, costs for Toyota will increase by more than 460 billion yen, the carmaker estimates based on simple calculations. Washington's further measures will affect Toyota's competitiveness in the key U.S. market, certainly dealing a heavy blow to the car company.
Washington may employ a strategy to force Tokyo to open its markets by bringing the Japanese side into a bilateral negotiations for a free trade agreement, using car tariffs as a bargaining chip.
Tokyo is urging Washington to return to the TPP, but the United States has given no positive sign in that regard.
A Japan-U.S. summit meeting is expected to be held in late September, and Tokyo will likely make some concessions as it needs to maintain good bilateral relations. The trade talks will likely continue as if on a tightrope.
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