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Trump on collision course with WTO over 'managed trade': ex-Japan negotiator

41313088.1 (41319132) - 27_01_2017 - US-POLITICS-TRUMP-REPUBLICANS.jpg
US President Donald Trump seems intent on imposing "controlled" or "managed" trade under the guise of bilateral free trade agreements (FTAs), in which case Washington is likely to clash with the World Trade Organization (WTO), a former senior Japanese government trade negotiator charged on Friday.

US President Donald Trump seems intent on imposing "controlled" or "managed" trade under the guise of bilateral free trade agreements (FTAs), in which case Washington is likely to clash with the World Trade Organization (WTO), a former senior Japanese government trade negotiator charged on Friday.

The former Ministry of Foreign Affairs negotiator, Yorizumi Watanabe, also said Mr Trump's resort to "bilateralism and reciprocity" in trade threatened to put the global economy back into a 1930s-style Great Depression.

This year is likely to "pose the most difficult challenge in postwar years for the multilateral trade system", said Mr Watanabe who negotiated a number of economic partnerships on Japan's behalf, including one with Singapore.

The US president has already clashed with Japan's Toyota over its proposed exports of cars from Mexico to the United States, and threatened punitive tariffs. But Mr Watanabe claimed that the Trump administration appears to have in mind a 20 per cent tariff on Japan's own car exports to the US.

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At the time of his election in November, Mr Trump talked of the need to reach "balanced" trade with Japan, which means "managed" trade and not free trade, Mr Watanabe said at a briefing.

The US leader has talked of a 20 per tariff on Japanese car imports into the US if Tokyo does not take measures to increase US vehicle exports to Japan. But this would clash with Washington's WTO commitment to limit tariffs to nearer 2 per cent, Mr Watanabe said.

Japan could then bring an action against the US under the WTO, in which case Tokyo "would win", he suggested. Japan "would not accept" such arbitrary tariff impositions, he insisted.

Japanese Prime Minister Shinzo Abe has said he is willing to consider a bilateral FTA with the US if it proves impossible to rescue the Trans-Pacific Partnership (TPP) now that Mr Trump has withdrawn the US from the 12-nation pact.

Japan is the only country, apart from New Zealand, in the TPP membership that does not already have some form of bilateral FTA with the US, noted Mr Watanabe who is now a professor at Tokyo's Keio University.

But it will be very important, he said, for Japan to be clear about what kind of bilateral agreement the US president has in mind, and that negotiations are not used to insist on "reciprocity" in trade exchanges.

The apparent demise of the TPP along with Britain's exit from the European Union point to the danger of generally rising trade protectionism and tariffs, and to a return of 1930s' "beggar thy neighbour" policies, Mr Watanabe said. This would begin a return of the "1930s nightmare".

He said Japan's options in the wake of Mr Trump's spoiling action against the TPP are to continue urging the US leader to change his mind; consider a "TPP-minus one" agreement with different rules from the current TPP, or to support some other vehicle for asia Pacific trade liberalisation.

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