WASHINGTON—A House Democratic leader on trade policy on Tuesday said the time is right to press Japan on its closed markets as Japan formally joins the United States and 10 other Asia-Pacific nations in negotiations to create a major new trade bloc.
Rep. Sander Levin of Michigan, top Democrat on the Ways and Means Committee, proposed that the Trans-Pacific Partnership, or TPP, talks should link the reduction of U.S. auto tariffs to the opening of the Japanese auto market. He said there should also be an enforceable way to stop Japan and other countries from currency manipulation and that Japan should agree to removing non-tariff barriers that keep American autos out of its markets.
Japan, Levin said in a speech to the Peterson Institute for International Economics, has “the most closed automotive market in the developed world.” He said that overall the United States had a $76 billion trade deficit with Japan last year, second only to that with China, and that autos accounted for two-thirds of that deficit. Imports from all countries account for just 6 percent of Japan’s auto market.
In April, when the Barack Obama administration approved Japan’s entry into the TPP negotiations, some lawmakers, particularly from the auto-producing state of Michigan, voiced skepticism that Japan would agree to substantive market-opening measures.
Levin’s proposal would tie reductions in U.S. auto tariffs, now 2.5 percent for autos and 25 percent for trucks, to the speed at which Japan increases its auto imports.
He also proposed that the TPP parties agree on a binding dispute mechanism to deal with currency manipulation — which can be used by a country to make its exports cheaper and imports more expensive.
Finally he said Japan should agree to eliminate all existing non-tariff barriers in the auto sector, such as discriminatory taxes, onerous vehicle certification procedures for imports and complex safety and pollution standards.
Scott Paul, president of the Alliance for American Manufacturing, applauded Levin’s suggestions, saying that if the administration “is serious about growing manufacturing jobs and signing a high-standard Trans-Pacific Partnership trade agreement, it will adopt these ideas as its bottom-line negotiating position moving forward.”
Japan is formally entering the TPP negotiations this week at its 18th round of negotiations now taking place in Malaysia. With the addition of Japan, the 12 countries would account for some 40 percent of world trade. The other 10 countries are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The goal is to wrap up negotiations by the end of this year.