Donald Trump has forced Japan into making a huge concession in terms of its trade relationship with the United States, according to the Financial Times.
The newspaper says that Japan has agreed to hold bilateral talks with America on trade. That’s significant – because up to now Japan has had a policy of negotiating as part of an international multilateral group.
In many ways, a bilateral – country-to-country – negotiation makes Japan’s position weaker.
So why has the Japanese Prime Minister Shinzo Abe, a supporter of multilateral negotiations, capitulated on this point?
Too big to battle
America is Japan’s largest trade partner. It is a crucial market for Japanese companies like Sony (owner of Colombia), Toyota and Softbank.
Japanese people have strong affection for American brands like Starbucks, McDonalds and Disneyland. So for Japan, talking to America directly makes sense, rather than as part of a group which includes other countries with different relationships with the United States.
Donald Trump much prefers bilateral deals and negotiations. It’s been his preference since he worked in business before he became president. It is clear that it makes it easier for him to press his American First agenda if the talks are bilateral rather than multilateral.
The Financial Times says the goal for Mr Trump’s is to “remake the world’s trading system”. The paper implies that countries which have “buckled under pressure” to the United States – like Japan – are likely to escape sanctions on their imports into the US.
Alan Beattie, the FT’s reporter, wrote: “Tokyo therefore finds itself pushed down the bilateral route.”
What is bilateral?
Japan has a much valued free trade deal with the European Union.
It’s often referred to as a bilateral arrangement although that is a slightly strange term to use about a deal with the European Union, which is a trading block made up of 28 members.
Negotiating with it, or them, is not easy – as Britain has learned from its extremely complex Brexit process to leave the EU.
Japan’s trade deal with the US comes in the context of a huge and escalating trade war between the US and China. Japan has already been caught in the crossfire, suffering heavy tariffs on its iron and steel exports to the US, with negative implications for its automotive industry.
Alan Beattie says Japan wants to “usher Washington down a more collaborative road” which I think neatly sums its up Japan’s diplomatic approach.
Why would it wish to fight with its ally over trade if there’s a chance of a better arrangement which suits both countries?
Unlike Japan, which is a fundamentally very pragmatic country, China appears to be in no such mood for collaboration or compromise.
The ideology which drives the Chinese government is inherently hostile to that of Donald Trump’s America First agenda. And Mr Trump’s advisors are taking a tough approach to China which is causing trouble to both sides.
Japan’s goal is to keep as friendly as possible in terms of business and diplomacy with both America and China. That’s an enormous challenge given Mr Trump’s disruptive approach, the rapid economic growth of China and the ideological divide between the nations. It leaves no simple choices for Japan’s hard-pressed diplomats.