US President Donald Trump reached an agreement with Japanese Prime Minister Shinzo Abe to open trade talks between the two nations.
Abe resisted for nearly two years the push to start bilateral trade talks with its second-largest trading partner, but Trump’s threatened auto tariffs forced him to reconsider.
The two countries have agreed that sanctions on auto exports would not be applied while the talks take place, Abe told reporters.
Washington wants to expand access for its automobile exports to encourage more production and jobs in the US. In agricultural goods, Japan will not offer better conditions than already exist in its other trade agreements, a joint statement by the two nations said.
More access to Japan’s market could help US farmers at risk from China’s tit-for-tat sanctions.
Trump said he expected the talks will come to a “satisfactory conclusion” as he spoke to reporters at the beginning of a meeting with Abe in New York.
“It can only be better for the United States, because it could not get any worse than what has happened over the years,” Trump said.
Both leaders are attending UN meetings this week.
Shares of Japanese automakers rose in Tokyo.
Subaru Corp, which is the most dependent on the US market, jumped more than 4 percent in morning trading, while Mazda Motor Corp advanced above 3 percent. Heavyweights Toyota Motor Corp and Nissan Motor Co made more modest gains.
“I think this is close to about the best result possible for Japan,” said Junichi Sugawara, a senior research officer at Mizuho Research Institute, citing the reprieve on auto tariffs and limits to US demands on agriculture. “It’s hard to think this will become an agreement that reduces the US trade deficit with Japan.”
The US and Japan want to address bilateral trade in goods during the first phase of the talks over the next few months, US Trade Representative Robert Lighthizer said in a conference call with reporters on Wednesday.
The second stage is to focus on a deal that would require congressional approval, Lighthizer said, adding that he plans to seek trade-negotiation authority to give Congress a yes-or-no vote on a final agreement.
The talks, which Abe characterizes as different to negotiations for a full free-trade agreement, follow a revamped pact between the US and South Korea.
Trade analysts said changes to the South Korea agreement were largely cosmetic.
Abe had also spent political capital on negotiating and finalizing the 12-nation Trans-Pacific Partnership (TPP) that Trump withdrew from in the first days of his administration.
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