Earlier this month, Japanese Prime Minister Shinzo Abe visited Washington for a conference with President Barack Obama. Abe made history by being the first Japanese Prime Minister to address a session of the Joint Houses of Congress. Abe also met with Obama to discuss a number of international topics, ranging from strengthening historically strong ties, to the updated defense treaty between the two nations, to the hotly contested issues surrounding the Trans Pacific Partnership free trade agreement.
The TPP has taken center stage in Japan-U.S. relations. As the two largest economies participating in the agreement, Japan and the U.S. also face the biggest obstacles in coming to an agreement on the trade accord. For Japan, rice is the big issue, while America’s automotive industries are lodging strong resistance here. Japan posts very high tariffs on imported rice, to protect an agricultural industry that is declining due to Japan’s aging population, as farmers age and retire without being replaced. In a country that already imports a majority of its foodstuffs, there are fears in Japan that signing the TPP could cause Japanese agriculture to collapse entirely. In the U.S., the Big Three American automakers, General Motors, Ford, and Fiat-Chrysler US, oppose the TPP due its relaxation of the 25% tariff on light trucks, which has been in effect since 1963. Ostensibly, the “chicken tax” was enacted to protect American automakers from foreign competition, mainly in the most American segment, the full-size pick-up truck. These offerings from the BIg Three are bringing in ludicrous profits, and commanding eye-watering transaction prices. The tax forced Japanese and other foreign competitors to build factories in the United States in order to avoid these taxes, resulting in Toyota and Nissan building their mid-size and full-size pickups in the United States. However, in light of the near collapse of the American automakers in the face of Japanese imports in the 1980s, fear of international competition remains strong. Automakers are concerned that imports from developing countries with lower labor costs will result in the collapse of domestic manufacturing.
The negotiations between Japan and the U.S. are fraught with tension. U.S. auto executives argue that Japan has imposed artificial trade barriers to keep American makers out of the market, while the Japanese counter that no American manufacturer has made a serious effort to build and market cars to Japanese tastes. In light of the enormous significance attached to the TPP, the Japan America Society of Greater Philadelphia will be hosting a program titled, The US-Japan Relationship at a Defining Moment on May 20 at the Union League of Philadelphia. Click the link for more details. You can also watch the Abe’s full speech below: