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Wednesday, November 20, 2019 - 14:25

MNI POLICY: Congress Knocks U.S.-Japan Trade, USTR Outreach


By Brooke Migdon and Alexandra Kelley

WASHINGTON (MNI) - U.S. House Ways and Means subcommittee members criticized President Donald Trump's administration for circumventing Congress while reaching an initial trade accord with Japan, and said the deal needed to better assist American farmers.

Members of Congress claimed Wednesday during a hearing on U.S.-Japan trade that consultations didn't take place before and during the U.S. Trade Representative's talks with Japan, as required under a 2015 act.

"Sadly the USTR ignored our request for meaningful consultation while negotiations with Japan were ongoing," Ways and Means Chairman Earl Blumenauer (D-OR) said in his opening statement. "Consultation that did occur was perfunctory and after the fact."

Committee member Congressman Ron Kind (D-WI) said the absence of USTR Robert Lighthizer, who "rejected" a request to testify, spoke "volumes as far as the disdain the current administration has to our role in establishing trade policy."

Kind said a comprehensive trade deal with Japan was a "pipe dream" and the U.S. could only gain the same market access in Japan as other countries by rejoining the Trans-Pacific Partnership. The U.S. withdrew in 2017 after Trump took office, which Kind called "one of the great strategic mistakes we made as a nation in the 21st Century."

Matthew Goodman, senior vice president at the Center for Strategic International Studies and a witness in Wednesday's hearing, said the U.S.-Japan agreement is not an inherently bad alternative to the TPP. "It's a step in the right direction," Goodman said. "But only a step."

Trump and Japanese Prime Minister Shinzo Abe's limited trade agreement signed in October would cut tariffs on U.S. farm products and Japanese industrial goods. It has been criticized in the U.S. for excluding key agricultural items and failing to properly address the Commerce Department's Section 232 auto investigation, which targets cars and parts from Japan and the EU.

Kind said Wednesday that the threat of auto tariffs was being used as leverage to "drive them to the table" and reach a more comprehensive agreement before the end of Trump's term.

Hammering out a second-stage agreement with Japan ahead of the 2020 presidential election will be tough, according to Goodman.

"Trade is difficult, but to negotiate something new seems very improbable," he said in an interview Monday, adding that nothing "serious" will be launched before the end of the year.

Hearing witnesses also expressed concern over the initial accord's failure to address currency manipulation.

"Currency manipulation is not tackled in stage one," said John Nassar, legislative director at United Automobile Workers. "That's important in a trade deal with any country."

"Currency is probably going to be the single hardest issue with Japan," Goodman said during his testimony Wednesday. "They will resist quite forcefully."

The limited agreement was passed in Japan's lower house Tuesday and is likely to pass in the less influential upper house, on track to come into force in January.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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