Japan, U.S. recognize challenges as 1st TPP-linked trade talks end

Japan and the United States on Friday recognized that many challenges lie ahead as they wrapped up their first round of talks linked to the ongoing Trans-Pacific Partnership free trade negotiations involving 10 other nations.

The three-day talks in Tokyo, covering autos and nontariff barriers in nine areas including insurance, were held in parallel with the TPP negotiations that Japan joined last month aimed at creating a massive regional free trade zone.

The bilateral dialogue came after a request from the United States, which has been seeking the further opening up of the Japanese market through the establishment of unified auto safety standards and other measures.

Takeo Mori, ambassador for economic diplomacy and head of the Japanese delegation, indicated after the talks that much more work needs to be done before the two sides can reach an agreement.

"As we are at the stage of narrowing down issues, we have yet to reach the stage for forging an agreement or finding common ground," Mori told reporters.

Mori said the talks covered all the issues that the two sides had agreed to put on the table and they did not touch upon the labeling of food products using genetically modified organisms.

Acting Deputy U.S. Trade Representative Wendy Cutler, who headed the U.S. delegation, said the bilateral talks "got off to a good start," but added, "We recognize we have a great deal of challenging work ahead of us."

Regarding the insurance sector that was discussed in the latest talks, Cutler said the U.S. side has a long-standing concern that private insurance companies and Japan Post Insurance Co., a unit of the state-owned Japan Post group, will not be able to compete on an equal footing.

While Japan Post Insurance announced last month that it will expand its business collaboration with American Family Life Assurance Co. (Aflac) to sharply increase sales outlets handling the U.S. insurer's cancer policies in Japan and jointly develop cancer insurance products, Cutler indicated U.S. concerns remain.

"We welcome the recent announcement between Japan Post and one U.S. insurance company as a positive step forward, but made clear that this does not solve the broad concerns we have in this area," Cutler said at a press conference.

She noted the tie-up merely addressed the issue of access to a wide distribution network and said the U.S. side intends to work with Japan to address the remaining concerns in the coming TPP negotiations as well as in the bilateral talks.

The timing of the next round has not yet been decided as the two sides need time to digest what was discussed in the latest talks, according to Japanese officials. The next TPP round will be held in Brunei from Aug. 22 to 30.

Agreements to be reached during the bilateral talks regarding the automotive sector will be reflected in the TPP negotiations, while those regarding nontariff measures will be implemented through other means.

"As the debates in the parallel negotiations and those in the TPP negotiations are linked to each other, we intend to work closely with the TPP team and negotiate to help serve Japan's national interest as a whole," Mori said.

The two countries announced the parallel dialogue in April, saying they had completed bilateral preparatory talks for Japan's participation in the TPP negotiations and agreed that U.S. tariffs on Japanese automobiles would be phased out using the longest staging period for any product in the TPP talks.

The agreement was seen as a concession by Japan in order to protect its agricultural sector in exchange, sparking concern that the country could be forced to make further concessions.

As the latest talks did not cover tariffs that Japan is keen to discuss, it aims to do so at the 19th round of TPP negotiations in Brunei.

While Japan is seeking to exempt sensitive farm products such as rice and sugar from the TPP's general rule of tariff elimination, Cutler indicated even such farm products should be put on the negotiating table.

Japan's TPP minister Akira Amari is set to attend the ministerial meeting on the first two days of the Brunei round, as well as bilateral negotiations to be held during the period.

In a related move, U.S. Trade Representative Michael Froman is scheduled to meet with Amari on Aug. 19 in Tokyo to discuss the TPP negotiations before the round.

The current TPP members are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.