Japan has agreed to hold talks about opening its automobile market and offered minor upfront concessions in a move that clears the path for the country to join broader U.S. free-trade negotiations.
The deal announced Friday by U.S. and Japanese officials will have little immediate impact on an auto market that is notoriously tough on foreigners. Japan agreed, for example, to increase from 2,000 to 5,000 the number of autos in different size classes that can be imported under a streamlined “preferential” customs process. That pales, however, next to the $2 billion or so worth of autos that Japan ships to the United States each month.
Still, U.S. trade officials said the agreement marked an important show of faith on Japan’s part that would allow more extensive bilateral talks with the United States about autos and other trade problems and open the way for Japan to join the 11-nation Transpacific Partnership discussions.
“We have an amazing opportunity . . . to address issues that have been long-standing and that have been of deep concern” to the U.S. auto industry, said Mike Froman, President Obama’s chief adviser for international economic issues. Along with autos, the Japanese agreed to some other immediate steps the United States requested as a precondition for Japan joining the TPP.
Tokyo also committed to a set of separate two-way talks that would delve more deeply into trade frictions between the two countries.
For Japan to join the TPP talks, all the nations involved — including large U.S. trade partners such as Canada and Asian nations such as Vietnam that U.S. economic officials are courting — must sign off on Tokyo’s participation.
That is expected to happen — and Japan is pushing for it. Many analysts have doubted Japan’s willingness to open more fully an economy that is an industrial power deeply integrated in the global economy but has maintained a frustrating level of protection in some important areas.
The yen has dropped sharply against the dollar since Abe’s election — making exported Japanese autos cheaper. The U.S. Treasury, in a periodic report on world currencies, said Friday that it would “continue to press” Japan to ensure its central bank actions are geared toward domestic economic conditions and are not an effort at “competitive devaluation” to boost exports.
For Obama, Japan’s participation elevates a central part of what has become an ambitious trade agenda and increases the likelihood that any resulting agreement may have what U.S. officials hope will be a deep impact on world trade and investment patterns. With Japan on board, the pact would cover some 40 percent of global economic activity. It would also mark a step forward in the Obama administration’s effort to deepen the U.S. presence in a region dominated by the rise of China.
Froman said the breakthrough with Japan was important not just for trade but “for overall U.S. strategic priorities.”
There are many skeptics — of TPP in general and of Japan’s involvement specifically. The aim is to complete the trade negotiations this year — an aggressive timetable for a pact that, if it lives up to its billing, would go far beyond traditional trade issues to cover such matters as limits on state-owned companies and rules governing technology and science-based industries.
The involvement of Japan, while a geopolitical plus for Obama, has raised a red flag for U.S. auto-state politicians and others who have been disappointed by prior negotiations with the Japanese.
Critics argue that the Japanese auto industry is effectively insulated by such a thicket of protections — from the value of the yen to nationalistic consumer preferences — that the talks are bound to disappoint.
While the auto industry has undergone massive globalization — from General Motors’ investments in China to the Japanese and German companies that build many cars in the United States — no foreign firms have set up shop in Japan.
Rep. Sander M. Levin of Michigan, an auto-state Democrat and ranking member of the Ways and Means Committee, called the concessions offered by Japan “a meaningless gesture.”
Levin said the idea of Japan joining the TPP would come under close scrutiny during a 90-day congressional review period.
As part of the talks, the United States agreed to eliminate — albeit on a slow schedule — the remaining tariffs on Japanese vehicles. Those are low, at 2.5 percent, for cars, but are a substantial 25 percent for trucks.