Japan has less room to compromise with the US under a bilateral trade deal than under a multilateral agreement such as the Trans-Pacific Partnership (TPP), Japanese Deputy Prime Minister Taro Aso said, taking a swipe at US attempts to directly pressure Tokyo into opening up heavily protected markets such as agriculture.
Aso, who heads Japan’s delegation in a newly created bilateral economic dialogue with the US, said that under the TPP, Japan would be able to accede to more US demands, as it could make up for the losses through agreements with other countries.
“In a bilateral deal, you can’t do that. You can’t get back what you lose from a compromise with the United States,” Aso said in a seminar at Columbia University on Wednesday.
Aso’s comments underscore Japan’s fear of a two-way agreement that would expose it to stronger US pressure to open up politically sensitive markets such as agriculture and beef.
After the first round of talks in Tokyo on Tuesday, the two sides remained at loggerheads on how to frame the bilateral economic dialogue.
On domestic policy, Aso, who is also minister of finance, said budding signs of recovery in the economy and private consumption are paving the way for Japan to proceed with a twice-delayed sales tax hike now scheduled for October 2019.
He also warned that there was no quick fix for the country’s tattered finances, shrugging off a chance the Bank of Japan (BOJ) would resort to “helicopter money” — direct underwriting of public debt to fund government spending.
Aso said he was aware of proposals by some academics for radical steps to spur growth, such as having the central bank directly underwrite government spending or intentionally creating sharp inflation to pay off public debt without raising taxes.
“In reality, there are various problems to such ideas. For one, it would undermine the BOJ’s independence and market confidence over monetary policy,” Aso said.
Given Japan’s huge public debt, any signs the government is abandoning efforts on fiscal discipline could also invite a bust in the country’s finances or runaway inflation that would have a detrimental effect on the public.
“We can’t allow that to happen... There’s no quick fix,” Aso said.
The only way to solve the problem would be to raise taxes, cut spending and take steps to revive the economy, he added.
“The economy is likely to do well ahead of the Tokyo Olympic Games in 2020, so it will be easier to raise the sales tax,” he said.
Japan has twice delayed the second promised tax hike after the first increase in April 2014 tipped the world’s third-biggest economy into a recession.
Separately, Japanese exports last month recorded their biggest gain in more than two years, official data showed yesterday, in a sign of optimism for the nation’s economy.
Exports last month expanded 12 percent to ￥7.2 trillion (US$66.1 billion at the current exchange rate), the strongest expansion since January 2015 and the fourth straight monthly gain, the Japanese Ministry of Finance said.
Export gains were led by strong demand for auto parts and optical instruments, such as mobile phone parts and tools to make semiconductors, the ministry said.
Imports rose 15.8 percent to ￥6.6 trillion, more than expected, mainly due to rising oil and coal purchases needed to fuel the Japanese economy.
The latest figures put Japan’s trade balance at ￥614.7 billion, down 17.5 percent from the same period a year ago.
Additional reporting by AFP
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