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Japan says preparing for all possible U.S. trade contingencies

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan is preparing for all possible contingencies regarding trade talks with the United States, the top government spokesman said on Friday, after U.S. President Donald Trump ditched the Trans-Pacific Partnership free trade deal this week.

Japanese Prime Minister Shinzo Abe is arranging to visit Washington next month, and an official in Trump's administration said Trump would seek quick progress toward a bilateral trade agreement with Japan in place of the broader Asia-Pacific deal.

"It is true that we are preparing to be able to respond to any possible situation," Chief Cabinet Secretary Yoshihide Suga told a news conference.

He refrained from commenting on U.S. trade policy until it becomes clear.

"The alliance and the economy between Japan and the U.S. is very important, so we would like to have talks with various levels with the U.S. (about) how we can develop."

Some Japanese officials said Abe's government should still try to convince Trump of the benefits of the TPP and multilateral free trade deals, while adding that they were not ruling out bilateral trade talks with the United States.

"We still stick to our best scenario (in pursuit of TPP), but that does not mean that we're inflexible," Masahiko Shibayama, an adviser to Abe, told Reuters.

"We need to prepare umbrellas for a rainy day. It's too early to decide what kind to umbrellas to bring, though."

Trump, who took office last Friday, reiterated on Thursday he would strike numerous bilateral deals, as opposed to multilateral accords, such as the TPP.

Japanese officials were cautious about any Free Trade Agreement (FTA) between Japan and the United States, as it could encourage Trump to step up pressure on Tokyo while providing few benefits for Japan's economy, they said.

Trump has threatened a "border tax" on imports into the United States and has said Japan has "unfair" barriers to foreign auto imports. Japanese officials pointed out that there are no tariffs on foreign car imports into Japan and maintain there are no discriminatory non-tariff barriers, either.

"We’ll calmly explain the fact that Japanese carmakers are investing in America and create a lot of jobs there," Shibayama said.

The TPP, which took years to negotiate among 12 countries, has often been described as being, at its core, a deal between the United States and Japan, the world's largest and third-largest economies respectively.

Abe has touted TPP as an engine of economic reform and a counterweight to a rising China but said on Thursday it was possible Tokyo and Washington could hold bilateral free trade talks.

Trump called the TPP bad for American jobs, but proponents of the pact worry that abandoning the project could further strengthen China's economic hand in the region.

Suga also said Japan would continue to monitor closely how the relationship between the United States and Mexico affects Japanese companies.

On Thursday, the White House floated the idea of imposing a 20 percent tax on goods from Mexico to pay for a wall at the southern U.S. border, sending the peso plummeting and deepening the crisis between the two neighbors.

Japanese manufacturers, including major automakers, operate factories in Mexico.

(Additional reporting by Kaori Kaneko; Editing by Chris Gallagher and Clarence Fernandez)

 

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