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Certain Aspects of Trade Deficit Issue between the US and Japan

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A noteworthy event during the current stage of the Global Chess Game occurred when, on 25 September of this year, US President Donald Trump and Japan’s Prime Minister Shinzō Abe signed a US-Japan trade deal on the sidelines of the scheduled United Nations General Assembly. We would like to highlight straight away that this document is not part of the U.S.-Japan Economic Dialogue, which needed to “generate concrete results” as stated by both sides back in April 2017, i.e. only three months after the inauguration of the current American President.

Let us also recall that the first step taken by Donald Trump as head of US government was to withdraw the United States from the Trans-Pacific Partnership (TPP) initiative, which had been in its last preparation stage at the time. Any issues concerning trade between the USA and Japan were meant to be resolved within the TPP framework, i.e. under the same terms and conditions that applied to the other partners (12 at the time) according to the agreement.

However, once the United States had withdrawn from the TPP, the aforementioned problems had to be handled by means of bilateral negotiations, with the final aim being the conclusion of an “all-encompassing” agreement. However, the deal signed on 25 September of this year is not such a document, since it only covers an insignificant proportion of bilateral trade and, therefore, only attempts to resolve a fraction of the long-standing problems between the two sides.

One of the main issues is the deficit in trade between the United States and its key Asian allies, which, in recent years, has reached approximately $60 billion per annum for the USA and Japan. Trade in goods accounts for $70 billion of the deficit, with trade in services reducing it by $10 billion. Clearly, such amounts are not as enormous as the trade deficit between the United States and the PRC (equivalent to $400 billion a year), or that between the USA and the EU ($140 billion per annum). However, even $60 billion is a considerable sum........

© New Eastern Outlook