Despite US Secretary of Defence James Mattis’ visit to Japan and South Korea earlier this month to reassure allies of the United States’ commitment to the region, there was still concern over what the Trump administration means for the region and the US–Japan alliance in particular.
On the agenda for Abe was a round of golf diplomacy at Trump’s Mar-a-Lago resort in Florida; feeling out a possible US–Japan bilateral free trade agreement in the wake of Trump’s withdrawal of the United States from the Trans-Pacific Partnership trade agreement; emphasising Japan’s positive contributions to the US economy, particularly by automobile manufacturers; and the proposal of a US–Japan Growth and Employment Initiative offering investment in areas of Japanese comparative advantage ‘to generate 700,000 jobs in the United States and create new markets worth US$450 billion over the next decade‘. This was thought to have included ‘provision of direct financial, engineering and technical input into Trump’s proposed infrastructure development program as well as other proposals for cooperation in cutting-edge technologies such as commercial aircraft, robots and artificial intelligence’.
Abe presumably also attempted to politely educate Trump on the importance of US–Japan security cooperation. A North Korean missile test on Sunday into the Japan Sea rammed home the message and a joint US–Japan statement affirmed that ‘the US commitment to defend Japan … is unwavering’.
The US–Japan relationship has proven remarkably durable over the last seven decades. From inauspicious beginnings as wartime enemies and the US-led occupation of Japan from 1945–52, the US–Japan alliance developed into a cornerstone of the Cold War US hub-and-spokes system of security alliances in Asia and the Pacific. The core tenet of the alliance — that the United States guarantees to defend Japanese administered territory in exchange for the use of land, sea, and air facilities in Japan for the maintenance of international peace in the Far East — is still of mutual benefit and great importance to both countries. Japan was able to recover and develop its economy and the breathing room afforded by the alliance enabled Japan to advance its exclusively defence-oriented approach to security policy (senshu boei) which continues to help mitigate the security dilemma and tensions with neighbours today. For the United States, its bases in Japan — the unsinkable aircraft carrier — are integral to its forward deployment strategy and its ability to project power in the Pacific. The US–Japan alliance enables the United States to be a Pacific power.
The relationship has had its ups and downs over the decades. It went through a tough spot in the 1980s and 1990s when Japan’s economic rise seemed to position it as a potential challenger to American economic pre-eminence. Japan’s trade surplus with the United States at the time accounted for over 50 per cent of the US trade deficit. Japan was also criticized for its ‘chequebook’ diplomacy during the 1991 Gulf War (despite its US$13 billion being the largest extra-regional donation to the war effort) and its lack of boots-on-the-ground.
Japan’s currency realignment under the 1985 Plaza Accord, its voluntary export restraints and the gradual liberalisation of particular areas of its economy, as well as Japanese patience in dealing with US demands to avoid any negative spill over into security cooperation and its incremental defence reforms since the end of the Cold War, saw the relationship recover to a new strength.
Yet Trump had seemed intent on turning back the clock on Japan. He has repeatedly criticised Japan for not paying enough for the costs associated with hosting US troops in Japan. And on trade, Trump has complained about Japanese auto factories in Mexico as well as Japan not ‘allowing’ enough US cars into the Japanese market.
On basing costs, Japanese Defence Minister Tomomi Inada was quick to roll out the numbers during Mattis’ visit demonstrating that in 2015 Japan paid ¥191 billion (US$1.7 billion) or about 86 per cent of the total. Indeed, when it comes to the hosting costs of US bases, Japan is the gold-standard ally paying far more than others including Germany and South Korea. Trump’s willingness to gamble with the foundations of the alliance in order to bully relatively small amounts of money out of Japan on top of what it already pays appeared nothing short of reckless. Welcome to the art of the deal by Trump.
It appears the three decade-long issue of automobile trade between the United States and Japan will have to be resolved for Japan to progress Mr Trump’s thinking on Japan. Mr Trump has been campaigning against China and Mexico for their ‘unfair’ trade but his trade team are concerned more generally about any country that has a trade deficit with the United States. They appear to worry about trade deficits in certain sectors as well, with Trump having threatened a 38 per cent tariff on Japanese cars.
In this week’s lead essay Shujiro Urata explains that last year ‘Japan exported 1.75 million autos to the US, while Japan imported just under 20,000’. Boosting exports of American cars to Japan will give the impression to Trump’s supporters that he has created jobs.
Japan imposes no tariffs on US autos but the US complaint has been a lack of access to the market due to other restrictions, regulations and barriers in the Japanese market that discriminate against foreign cars. The Japanese argument, for decades, has been that Japanese consumers just aren’t interested in American cars. In 2016 Japan imported just over a quarter of a million cars from Europe, according to Urata, and that number has been growing while the miniscule imports of US cars has been falling. In fact only one US car, Tesla, made a recent survey of the top 100 most popular automobiles in Japan, compared to 28 European cars.
American auto manufacturers could learn from their European competitors and invest in auto dealerships in Japan, put the steering wheel on the other side of the car and make cars that Japanese want to buy. They should take advantage of the fact that Mr Abe, fairly or not, will have to appear to resolve this longstanding issue for the bigger strategic game he is playing with a suddenly less predictable partner.
So far, Abe has played a deft game in his diplomatic dealings with Trump. Trump put a friendly face forward in his meeting with Abe and US–Japan alliance hands and Japan economy watchers breathed a sigh of relief. But despite the lack of harsh words during this time around, anxiety over the longer term remains. The economic challenges Japan faces are still significant, and Japan is more exposed to them than any other US ally.
The EAF Editorial Group is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.