Pence pushes Japan to start trade talks, tells South Korea to brace for review of current deal

TOKYO – The United States wants “stronger and more balanced bilateral trade relationships” with countries including Japan and South Korea, Vice President Mike Pence said Tuesday, raising the prospect of opening bilateral talks with Tokyo and reviewing a deal already struck with Seoul.

Pence’s remarks, to business leaders in South Korea and then after meetings with Japan’s prime minister and his deputy Tuesday, hew closely to President Donald Trump’s “America First” promises on the campaign trail.

“Under President Trump’s leadership, the United States seeks stronger and more balanced bilateral trade relationships with every country, including Japan,” Pence said in Tokyo after opening an economic dialogue with his Japanese counterpart, Taro Aso. “We seek trade that is free. We seek trade that is fair,” Pence said.

Although the tone was friendly after the meeting, Japan and the United States appear to have decidedly different ideas about where their trading relationship should go.

Trump withdrew the United States from the Trans-Pacific Partnership pact immediately after taking office, and Pence said Tuesday that the TPP was “a thing of the past.”

Instead, the vice president opened up the prospect of forging a bilateral deal with Japan, which Trump has repeatedly accused of engaging in unfair trade practices. The U.S.’ trade deficit with Japan stood at almost $69 billion last year.

The White House had asked Japan to open bilateral trade talks at this week’s first meeting, part of the administration’s efforts to rectify what it says is a trade imbalance. But Japan rejected the idea of starting bilateral trade negotiations, the Asahi Shimbun reported last week.

A bilateral deal would likely require Tokyo to respond to politically sensitive demands like removing trade barriers on cars and agriculture.

Instead, Tokyo is looking at reviving the TPP without the U.S.

One of Prime Minister Shinzo Abe’s closest aides, chief cabinet secretary Yoshihide Suga, suggested that the Japanese government might try to breathe new life into the TPP, which was meant to encompass 12 Pacific Rim nations that comprise and covers 40 percent of the world economy.

It was led by the U.S. and Japan, but also included Canada, Australia, Singapore and Chile.

“We have a feeling that the 11-nation framework should be given weight,” Suga said in an interview with the Kyodo News Agency Saturday.

Abe had previously said that TPP without the U.S. would be “meaningless.”

But his government has re-embraced TPP because even without the U.S., it may be the best option for Japan, said Tobias Harris, a Japan analyst for Teneo Intelligence, a consultancy. It was certainly looking better than an alternative bloc led by China, the Regional Comprehensive Economic Partnership.

Reviving TPP even without the U.S. would allow Japan to present itself as a regional leader and an alternative to China, Harris wrote in a research note.

“Second, it gives Japan some leverage over the U.S. in their bilateral economic relationship, while also leaving the door open for the U.S. to join in the future,” he said.

Japan ratified the TPP deal even after Trump won the presidency, an apparent attempt to change his mind, but Trump went ahead and formally withdrew from the pact that he had labeled as “job-killing.”

But Trump has taken a more conciliatory tone since meeting with Abe in February at the president’s Florida resort. During that meeting, they agreed to set up this economic dialogue.

Pence and Aso will meet again this year and said in a joint statement Tuesday that the talks “should generate concrete results in the near term.”

One of the core goals of the dialogue would be to develop a “common strategy on trade” including setting up “a bilateral framework for setting high trade and investment standards.”

Aso said that the friction that the United States and Japan experienced in their trade relationship during the 1980s and 1990s was behind them.

“We’re entering a new area where we start from cooperation,” he said, standing next to Pence. “Instead of one side telling the other what to do, I want to start debate on a relationship that is mutual and strategic.”

James Schoff, a Japan expert at the Carnegie Endowment for International Peace, called the economic dialogue “aspirational.” There would also be a limit to how far any discussions could go until the Trump administration put in place an agriculture secretary and a trade representative, he said.

“This is a tentative first step, a way to start this discussion,” he said. “But it’s good that they’re doing this as a way to manage the alliance at this important time, when we have the North Korea problem and China policy to deal with.”

Before heading to Japan Tuesday, Pence told U.S. and South Korean business leaders in Seoul that the Trump administration wanted to reform the South Korea-United States bilateral deal, known as “Korus.”

“The United States’ trade deficit with South Korea has more than doubled since Korus came into effect. That’s the hard truth of it,” he said.

“And our businesses continue to face too many barriers to entry, which tilts the playing field against American workers and American growth,” he said, adding that Washington would seek to work with Seoul to “reform Korus in the days ahead.”

The deal was forged during the George W. Bush administration but wasn’t ratified by Congress until five years ago.