As the United States deepens in rebalance to Asia, cracks are emerging and growing in the Japan-US relationship, exacerbated by issues such as the Crimea crisis, the G20 meeting agenda, the TPP negotiations and even the new Japan-US defense guidelines.
Differences between Japan and the US began to emerge over the “Abenomics” strategy. At the G20 Finance Ministers and Central Bank Governors Meeting, which ended on February 23, senior Japanese and US officials indicated that there are growing conflicts between the two sides. In setting up the agenda for the G20 finance ministers meeting, a senior official from the US Department of Treasury said that the meeting should focus on how to cope with the issue of the chaotic exchange rates of emerging economies. The same official urged Japan to “pay attention to the balance of economic growth and sound finance”, and to “focus on domestic demands in its economic policy and not to rely on currency depreciation to spur exports.” The official’s words showed strong US disapproval of the yen depreciation. Japanese Finance Minister Taro Aso, however, urged the emerging economies to promote structural reforms to solve their problems in current account deficits, as well as to check inflation and cope with currency fluctuation and depreciation. Japan’s central bank governor Haruhiko Kuroda said that the hysteria in emerging markets could be solved through financial and fiscal policy coordination. In order to secure Japan’s proposed agenda for the G20 finance ministers meeting, Aso tried to take the yen depreciation issue off the agenda. Aso and Kuroda clearly understood US intent, and worked hard for the agenda to be favorable for Japan. On the surface, this is a tactic that Japan has used for years, but it showcases a deep-rooted disagreement between Japan and the US over the currency issue.
There was also tension in the TPP talks. Both Japan and the US are highly supportive of the TPP, with the goal of dominating trans-Pacific trade and countering China’s rise. While negotiations should be going smoothly, both Japan and the US began to compete for a dominant role in the TPP negotiations after Japan announced to join the TPP talks last year. At the negotiation table, the United States tried to coax Japan into collective discussions and also created a framework for resolving Japan-US bilateral issues. However, the talks have since been bogged down by disagreement over tariffs. The US side demanded that Japan open its agricultural market, and Japan asked the US to reduce tariffs on vehicles imported from Japan from 2.5 percent to zero, bringing it down to the South Korean level. During their talks, Japan first signed the Economic Partnership Agreement (EPA) with Australia, attempting to set a model of customs duty for the US and to lower the requirements of the TPP, and “realistic approach.” The protection of agricultural products is the bottom line for talks of the Liberal Democratic Party, because it has a direct bearing on the pool of votes for the LDP. For the US side, the interest of the big three automakers is central to President Obama. Therefore, the TPP talks also reflected the domestic politics of Japan and the US, and served as evidence for the historical logic that Japan-US trade is an internal political issue.
The contention between Japan and the United States is, in essence, the fight for a dominant role in the Asia-Pacific region. Since the 2008 global financial crisis Obama has vigorously promoted the TPP, which he considered to be a symbol of preeminence in the Pacific. On the contrary, Japan has considered the TPP as a tool of the United States to disintegrate the “East Asia Community”, which has long been dominated by Japan. Several Japanese administrations were reluctant to join the TPP negotiations, and preferred to find a solution for defending Japan’s dominant role in the “East Asia Community.” Acknowledging rapid progress in the TPP talks, particularly the launch of the Transatlantic Trade and Investment Partnership, and fearing that Japan might be left out, Shinzo Abe agreed to “conditionally” join the TPP talks. Abe’s condition was that Japan would exit the talks if the LDP could not be defended. On February 17, the United State and the European Union exchanged their lists of tariff reductions for the Transatlantic free trade area, but the EU has not recognized the reduction list between Japan and the EU. Under such circumstances, Japan repeatedly requested ministerial meetings with the United States, but it failed in its attempt to force the US to soften its stance. Japan’s dream of serving as a leader at the negotiation table for Asia has also been smashed.
On the new guidelines for Japan-US defense cooperation, it appears harder for Japan and the US to reconcile their conflicts, because the revisions have a direct bearing on the remapping of the Japan-US alliance. The US, on the one hand, continues to promote its Asia-Pacific strategy, and on the other hand, advocates for a “reduction in overseas military deployments” for fiscal considerations. For example, the rebalancing task for regional security forces might fall on Japan’s shoulders. In 2013, however, Japan’s total debt exceeded 1,000 trillion yen while its current account surplus declined to 3.3 trillion yen, which was the lowest level since 1985. This precipitate a fast decline in domestic savings and an inability to issue domestic treasuries, and it will have to rely on overseas borrowing in the future. Under such circumstances, the long-term interest rates, which impact strategic investment, will surge, and the conditions for Japan’s economic growth will worsen. Whether or not the Abe government can justify this to its people will decide the fate of his government. On the other hand, the new guidelines will involve such sensitive issues as “lifting the ban on collective self-defense”, modifying the peace constitution, and providing constitutional explanations. The Abe government recently adopted a decision that collective self-defense rights were “not unconstitutional”, and Abe also mustered support for the domination in the “Asia security and defense community. This has the unfortunate effect of decimating Abe’s approval rate in Japan. Amid the confrontations between China and Japan, and the growing relationship between China and the United States, it is unknown whether or not Abe could readily accept US-dominated revisions to Japan-US defense cooperation, and share US’ security costs in Asia,. This will probably be the test of Japan-US relations in the future.
Liu Junhong is a research fellow at the Chinese Institute of Contemporary International Relations.
