U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe are both casting about for new policies and strategies as they seek to revive their sagging political and diplomatic fortunes, while the Japanese leader also faces the difficult task of juicing economic growth in the face of his country’s long-term demographic decline. Although the Osaka G-20 Summit has come and gone, there’s still a huge opportunity for both leaders to work together and deliver some major wins for their economies, starting with trade reform, according to an op-ed by James Carter and Mieko Nakabayashi, writing in The Hill.
- The top priority must be a commitment to major trade liberalization measures, hopefully encapsulated in an overarching U.S.-Japan Free Trade Agreement. That includes full reciprocity on some of their biggest, and hitherto often controversial, categories: “zero tariffs on U.S. agriculture and autos paired with zero tariffs on Japanese agriculture and autos.” It is certainly strange that the two countries, close allies and trade partners since the Cold War, still don’t have an FTA like the KORUS agreement with South Korea.
- The authors also call for sweeping reforms in Japan, including, “Less government planning, more private innovation; less regulation and fewer subsidies; more freedom to hire and fire employees as needed; less government spending; lower taxes on everything; and most importantly, far more emphasis on policies to coax workers into the labor force and to arm them with the training and tools to be productive.”
- They also caution that throwing money at more big infrastructure and public sector projects won’t help spur sustained growth — after all it hasn’t for the last two decades.
- Japan can also do more to help carry their shared military burden by spending more on defense, accelerating progress towards the stated goal of 1.3% of GDP.