Will Japan be Able to Avoid a Bilateral Free Trade Agreement With US?

Forex News

Japan may be forced to conclude a bilateral free trade agreement (FTA) with the US, despite its reluctance. Naoyuki Shinohara, a former deputy managing director of the International Monetary Fund and currently a professor at a University of Tokyo research institute, said that Washington will continue to insist on a bilateral free trade agreement with Japan, since the US is interested only in a bilateral deal, as it was with South Korea.

Earlier this week, Deputy Prime Minister Taro Aso ruled out the possibility of opening negotiations on a bilateral trade deal, stressing that this would not benefit Japan. Japanese policymakers worry that Trump could use a similar approach to what he took with South Korea, which agreed on a trade pact with a side deal to deter competitive currency devaluation.

Global markets were shocked this month when Donald Trump decided to impose tariffs on Chinese goods, and Beijing threatened similar measures, raising concerns about the global trade war. Naoyuki Shinohara also warned that an escalating trade war between the US and China could spread, including to Japan.