U.S. says Japan has long way to go to open markets
WASHINGTON • Japan still has a long way to go before it can say its markets are open, the top U.S. trade official said on Friday.
Trade Representative Michael Froman said he hopes Japan's recent entry into the Trans-Pacific Partnership (TPP) free trade negotiations will provide opportunities to tear down those barriers.
"I think we all bear the scars of trying to open Japan's market in the past," Froman told reporters at a briefing, acknowledging the "historical difficulties" in the trade relationship.
In their long history of trade disputes, the U.S. has alleged Japanese markets are closed to imports because of restrictive practices that are tolerated or even encouraged by the government. At the same time, Japan has relied heavily on exports as an engine of growth for its sluggish economy.
Froman mentioned autos specifically one of the thorniest issues in trade relations.
"Right now, all foreign penetration of the Japanese auto market is 6 percent, and so I think everyone believes there is a long way to go before we can really say the Japanese market is open," he said.
Japan formally joined the United States and 10 other Asia-Pacific nations in negotiations to create a major new trade bloc during the 18th round of talks in Malaysia last month. With the addition of Japan, the 12 countries would account for some 40 percent of world trade volume.
The other 10 countries are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Froman was speaking ahead of a trip to Japan and Brunei that will revolve around the trade negotiations. The next round of TPP talks is in Brunei from Aug. 23-30.
Froman said he still believes it is possible to clinch the deal by the end of this year, even with the added complications of Japan's very late entry into the process. However he did concede that the timetable was "ambitious."
Some in Congress are urging the Obama administration to link the reduction of American auto tariffs to the opening of the Japanese auto market in the TPP talks.
Rep. Sander Levin of Michigan, the top Democrat on the Ways and Means Committee, said recently that Japan should agree to eliminate all existing nontariff barriers that keep American autos out, such as discriminatory taxes, onerous vehicle certification procedures for imports and complex safety and pollution standards.
Japan has the most closed automotive market in the developed world. He said that overall the United States had a $76 billion trade deficit with Japan last year, second only to that with China, and autos accounted for two-thirds of that deficit.
Levin's proposal would tie reductions in U.S. auto tariffs, now 2.5 percent for autos and 25 percent for trucks, to the speed at which Japan increases its auto imports.
Lack of access for U.S. autos held up the recently approved trade pact with South Korea for three years.
Turning to other issues in the TPP talks, Froman said the U.S. is concerned about respect for human rights in Vietnam and those concerns are translating in TPP negotiations into labor rights provisions "ensuring that Vietnam is committing both in law and practice to improving their treatment of labor."
The U.S. has said Vietnam's worker-rights protections fall short of international standards. There are restrictions on unions and strikes, and collective bargaining is still new. In addition, Vietnam has laws that prohibit child and forced labor, but the government is struggling to enforce those laws.