Asia-Pacific Trade Meetings Kick Off, as US Leader Meets with Japan, Korea Counterparts
US President Donald Trump began his five-nation trip in the Asia-Pacific region this past weekend, starting with a visit to Tokyo to address trade relations and other foreign policy matters with Japanese Prime Minister Shinzo Abe.
The meeting of leaders from two of the world’s largest economies was being closely watched for signs of any outcomes on trade issues, including possible news of FTA plans.
Leaders told reporters afterwards that they hope to boost US-Japan economic ties, including on trade and investment. A summary issued by the White House outlined their shared interest in infrastructure projects in the region, so long as these are in line with key principles such as transparency and good governance. The summary also noted the growing influx of foreign direct investment from Japan to the United States, including over the past year.
Both Trump and Abe praised their existing relationship, and reportedly highlighted the value of ongoing discussions under the US-Japan Economic Dialogue led by US Vice President Mike Pence and Japanese Deputy Prime Minister Taro Aso. The last meeting under that forum was held on 16 October. (See Bridges Weekly, 19 October 2017)
Trade rule-making, trade deficits
Speaking at a joint press conference, Abe said that “together, Japan and the US are the two global economic leaders, occupying 30 percent of the global economy.”
He added that not only does this make them logical partners in a bilateral context, but it also prepares them to play a leading role in the “high-standard rulemaking in trade and investment in the Asia Pacific region.”
In a separate speech given at the US ambassador’s residence in Tokyo, Trump referred to his concerns over “massive trade deficits” between Washington and Tokyo, flagging specifically automobiles as an area of concern. Trade deficits have been a recurring theme under the new US administration, particularly with major partners.
“So we'll have to negotiate that out, and we'll do it in a very friendly way, and I know it's going to be a successful negotiation,” said Trump in response to questions from business leaders. A separate statement from the White House did welcome efforts from Tokyo in areas such as financial incentives for motor vehicles, without elaborating further.
However, no announcement was made on possible FTA talks in that context. Separately, Aso told reporters this week that bilateral trade talks would not be forthcoming at this stage, and suggesting that negotiations on a free trade agreement are not the right approach for dealing with the US administration’s deficit concerns. He instead referred to the bilateral dialogue in place as a more appropriate forum.
This same week, officials from the two sides announced progress on a bilateral energy partnership, with the US Trade and Development Agency (USTDA) and the Japanese Ministry of Economy, Trade, and Industry (METI) signing a Memorandum of Cooperation “to advance quality energy infrastructure in third-country emerging markets in the Indo-Pacific.”
Trump, Moon move to accelerate KORUS talks
Trade also took centre stage during meetings between Trump and his South Korean counterpart, President Moon Jae-in, in Seoul this week, particularly in light of ongoing discussions to amend an existing trade pact.
During the meeting, Trump reiterated past claims that that the South Korea-US Free Trade Agreement (KORUS FTA) was “quite unsuccessful and not very good for the United States.”
Trump called for reaching a “free, fair, and reciprocal” trade arrangement, along with amending the KORUS accord itself, which entered into force in 2012. The two leaders agreed this week to “expedite” the KORUS amendment discussions, according to Moon.
According to local media reports, the South Korean government is set to publish an “economic feasibility” report on revising KORUS this coming Friday, 10 November, flagging which areas could be updated, under which conditions.
Nevertheless, South Korea’s Minister of Agriculture, Food and Rural Affairs Kim Young-rok, told the Korea Times earlier this month that “there is no way Korea will offer more concessions to the US. This time, the US should offer to import more from Korea.”
The South Korean official highlighted in particular Seoul’s concerns over a burgeoning trade deficit in farm goods since KORUS’ entry into force.
A series of other high-level meetings on trade are planned for the rest of this week in the Asia-Pacific. Trump is meeting in Beijing with his Chinese counterpart, President Xi Jinping. Shortly thereafter, regional leaders will convene at the Asia-Pacific Economic Cooperation (APEC) Leaders’ Week in Danang, Vietnam.
APEC leaders will discuss a series of issues related to advancing regional economic integration and collaboration, at a meeting that comes at a “very complex time due to the many views on trade policy around the world,” said Allan Bollard, the Executive Director of the Singapore-based APEC Secretariat, in comments to the Straits Times.
The 21 APEC countries represent about 39 percent of the world's population, 57 percent of global gross domestic product (GDP), and nearly half of international trade. The APEC meet will be followed by the East Asia Summit (EAS) in Manila, Philippines on 13-14 November.
ICTSD reporting; “Korea diversifies agricultural export markets,” THE KOREA TIMES, 1 November 2017; “Trump Shifts Course, Will Attend East Asia Summit in Manila,” THE DIPLOMAT, 6 November 2017; “Report outlines amendment scenarios for KORUS FTA,” THE HANKYOREH, 3 November 2017; “Danang gears up to host leaders at Apec summit,” STRAITS TIMES, 7 November 2017; “Japan dismisses the idea of a two-way trade pact with the US, no matter what Trump wants,” REUTERS, 6 November 2017.