The United States and Japan appear close to a deal to allow Tokyo into negotiations on a U.S.-led free-trade agreement in the Asia-Pacific region, U.S. private-sector industry and labor officials said on Thursday.
"It does certainly look like (they are) about to make that announcement," despite the objections of U.S. labor groups concerned about removing U.S. tariffs on Japanese cars and trucks, Thea Lee, deputy chief of staff at the AFL-CIO labor federation, told the Washington International Trade Association.
"I think at this point we're going to have to shift (strategies) and try to figure out, as Japan joins, that we are putting on the table all the things that are most important to us," Lee said.
Japan asked in March to join negotiations on the proposed Trans-Pacific Partnership and is awaiting a formal decision by the 11 currently participating countries.
If the world's third largest economy is allowed into the negotiations, the final agreement would cover nearly 40 percent of world economic output.
Japanese Economics Minister Akira Amari said on Tuesday Japan and the Unites States were in the final stage of consultations about Japan joining the TPP.
EYES ON JULY ROUND
TPP members will hold their 17th round of talks next month in Peru and hope to reach a deal this year.
With negotiations at such an advanced stage, Washington is looking for an "early harvest" of commitments from Tokyo in areas such as agriculture, insurance and autos to show that its entry will not slow the talks down.
One business source, speaking on condition he not be identified, said the United States and Japan were striving to reach a deal by the weekend.
That would allow the White House to give Congress 90-day notice that it plans to start trade negotiations in time for Japan to participate in the July round of TPP talks.
U.S. labor groups are worried about job losses in the auto sector if the United States agrees in the TPP talks to eliminate a 2.5 percent tariff on Japanese passenger cars and a 25 percent tariff on Japanese light trucks.
"This is a sector that was on death's door and then has seen a very strong recovery. What we don't want to do is enter into a trade agreement that will undermine the ability of the U.S. auto sector to create good jobs," Lee said.
Ford Motor Co also strongly opposes Japan's entry into the TPP, saying that Tokyo has not followed through on previous commitments to dismantle regulatory and other non-tariff barriers that block imports of foreign cars.
The Detroit-based automaker charges that Japan's market remains largely closed to imports even though Tokyo has no tariffs on foreign cars.
One possible way U.S. and Japanese officials could address U.S. auto sector concern is by agreeing to let the United States keep its auto and truck tariffs, or to phase them out over a long period of time.
But some U.S. business groups, such as the National Association of Manufacturers, worry that excluding any sector from tariff cuts will encourage other countries to try to protect their own sensitive sectors from market openings.
Such a "Swiss cheese approach ... will fail to achieve the needed growth-producing liberalization" and diminish the value of the pact, said Linda Dempsey, vice president for international economic affairs at the U.S. manufacturers group.