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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