Washington Insider: Trade Frictions Grow

Politico is reporting this week that Japanese officials are expressing growing frustration with the Trump administration’s economic policies and are vowing to continue striking trade deals with other countries that undercut U.S. agricultural exports rather than seek new trade deals with the United States.The frustration comes both from President Donald Trump’s harsh rhetoric on trade and from his pullout from the 12-nation Trans-Pacific Partnership--which Japan still hopes can provide a bulwark against China’s growing influence in the Asia-Pacific region.Meanwhile, there is growing evidence that the U.S. withdrawal from the TPP is taking a sharp toll on rural America, Politico says. In August, the volume of U.S. sales of pork to Japan dropped by 9 percent year over year, a serious blow to farmers who had been preparing for a big increase in sales because of lower tariffs in the TPP.Instead, other countries that export meats, grains and fruits have seized on their advantage over American growers and producers in the wake of the U.S. pullout from the TPP.Politico also notes a new Reuters poll that shows Trump’s favorability in rural America — once a great stronghold — dropped from 55% last winter to 47% in September. The poll also showed a plunge in support for Trump’s trade agenda among rural voters.Both Vice President Mike Pence and Agriculture Secretary Sonny Perdue, who were widely known as free traders before joining the administration, have pointed to the president’s desire for “beautiful” new trade deals to replace the TPP.Perdue said this month that crafting a new deal with Japan was a top priority. And next week, Pence will meet with his Japanese counterpart as part of an effort to reboot the economic relationship between the two countries.Politico also reports that it has interviewed more than half a dozen senior Japanese officials who said they were uneasy with use of bilateral deals to replace the TPP, arguing that the goal of the multinational agreement was to create a wide international playing field.These officials said they are dismayed by Trump’s seeming inability to understand the importance of a multinational pact to establish U.S. leadership in the region and set the trade rules for nations on both sides of the Pacific Ocean as a counterweight to China’s rising influence.“Our prime minister has made it quite clear that we respect the U.S. decision, and that is our official position, but I think withdrawal from TPP is very wrong,” said one senior official. “Honestly, it has diminished many of things that the U.S. has achieved in the region.”In response, Japan has continued negotiating with American trade competitors, striking a political deal on a landmark free-trade agreement with the European Union in July while continuing to work toward closing a deal with the 11 remaining members of the TPP. Interviews with senior Japanese officials made clear their ultimate goal is to persuade the United States to rejoin the TPP, Politico says.There are some signs the Japanese strategy is working, Politico notes. Republicans in Congress, many of whom were TPP supporters, are expressing impatience with the administration and a conviction is growing that U.S. agricultural industries are suffering because of tensions unleashed by the TPP pullout."We cannot allow much more time to lapse in creating opportunities to have other agreements, and especially when you look at Japan," said Rep. Dave Reichert, R-Wash., chairman of the House Ways and Means Trade Subcommittee, as his panel wrapped up a hearing last week on trade opportunities in the Asia Pacific region.However, the President has shown no sign of reconsidering his earlier pullout from the TPP and recently told Forbes magazine, “I consider that a great accomplishment, stopping that. And there are many people that agree with me,” Trump said. “I like bilateral deals.”Ag secretary Perdue, who has often sought to counter Trump’s skepticism about free-trade agreements, raised the stakes with comments this month suggesting he shared a sense of urgency about getting a new deal in place.“We are eager to enter into bilateral trade negotiations with Japan and lower those barriers to address the preferences they seem to have currently for [rival agricultural producers] Australia, the EU, Chile, Mexico and other countries,” Perdue said at an international trade-association meeting. “We think our geopolitical relationship with Japan should lead to a preferred status in that way as well.”However, the Agriculture secretary has recently been commenting on growing frustration in the farm belt where producers expect to continue losing market share in meat exports to other countries, in spite of growing U.S. production and stocks. The main cause of this trend is seen as new, high import tariffs on the other side of the Pacific.Well, there clearly is a disconnect between at least some of the administration’s trade goals and those of many U.S. economic sectors, including much of agriculture. This is largely a behind-the-scenes fight now, but that could change dramatically if the administration moves to make major changes in NAFTA, or to take steps to reduce access to other key markets, especially in Asia, Washington Insider believes.