US-Japan: Likely shape of economic dialogue? - Nomura

According to analysts at Nomura, the next major event concerning US-Japanese relations is the US-Japan economic dialogue due to take place in mid-April.

Key Quotes

“What we think is likely to happen is that the US will try to put pressure on Japan in order to reduce its trade deficit with Japan, while Japan offers to cooperate with the US in the field of infrastructure in order to fend off this pressure.”

“It will be particularly interesting to see whether the US tries to persuade Japan to accept a free trade agreement (FTA). The main advantage to the US of such an agreement would be that bilateral talks would make it easier for the US to put pressure on Japan. US Commerce Secretary Wilbur Ross, who is expected to join the US-Japan economic dialogue, has said that it is a "very high priority" for the US to reach a bilateral trade agreement with Japan and has indicated that he is eager to start such talks as soon as possible. We think the Japanese government is concerned that the US will try to put pressure on it to open up the Japanese market to imports of agricultural products and automobiles.”

“We think that, in order to fend off such pressure, the Japanese government will offer to cooperate with the US in the field of infrastructure. Hiroshige Seko, minister of economy, trade, and industry, is reported to have visited the US in order to prepare for the US-Japan economic dialogue and to have had discussions with Mr Ross and other members of the Trump administration. While it is not clear what such cooperation would entail, the Yomiuri Shimbun published an article on 10 March according to which Japan would help the US to increase its infrastructure exports to emerging markets, thereby helping to create jobs for US workers and reduce America's overall trade deficit. The focus would apparently be on railway and harbor infrastructure, with US and Japanese private-sector companies taking the lead.”