News From and On Japan in the period Oct. 31 – November 13: let’s talk Trump

No misunderstanding: there were only a few, if any, Japanese leaders in politics and business who would not have preferred Hilary Clinton over Donald Trump as next president of the USA. Like others, the Japanese are not fond of surprises and Mrs Clinton was a sure bet to maintain the status quo between Japan and the USA, Mr Trump is not. Prime minister Abe had set a meeting with Clinton in New York on Nov. 17, but now The Donald has been chosen, PM Abe rushes to the USA as one of the first foreign leaders to meet with Mr Trump: the meeting is scheduled for … November 17. Donald Trump has suggested that the U.S. could remove troops from Japan and urged Tokyo and Seoul to consider developing nuclear weapons – almost certainly sparking a nuclear arms race in Asia – to reduce the security burden on the US off North Korea; he declared the TPP as over, so there is ample reason for a thorough discussion.

Let’s look in this edition of News From and On Japan what articles in different newspapers and magazines write about the main topics for Japan in Trump-time: security (the USA as Japan’s big brother when it comes to defend its territory), economy (no TPP, “America First”, implying less export from Japan to the US), the value of the Japanese yen (could go up as it is considered a safe haven and as the US dollar may be pushed down), restructuring of certain sectors in corporate Japan (no TPP could end up in “no restructuring of Japan’s agricultural industry).

  • Politics / security
    • There are about 50,000 U.S. troops stationed in Japan where the U.S. have the exclusive use of 89 facilities. The Japanese government pays the U.S. government nearly USD 2 billion per year as contribution of  the cost of stationing U.S. forces in Japan. I have attached a recent paper by the American Congressional Research Service about the U.S. – Japan Alliance.
      When Donald Trump suggested during his presidential campaign that he would make U.S. ally Japan (and allies in Europe) pay more of the financial burden for their defence, reactions in Japan were sceptical. Two days after the election results were clear, Japan’s defence minister, Tomomi Inada, said according to Kyodo News Agency that Japan is paying enough. “I believe it is enough. We are bearing the costs of what we ought to pay at present.”
    • Then there is of course the question who is the beneficiary of this deployment of U.S. forces in Japan. Japan alone? One could also argue that Japan is a defense line for the U.S.A. against China. Reuters reported this week that one of Trump’s advisors told the news agency that Trump was looking to Japan “to play a more active role in Asia.” A tougher stance against China and a call for Japan to play a bigger security role through a Trump-Abe axis would fit with Abe’s hawkish policies that include allowing the military to operate more freely overseas. 
    • Tokyo based online international news magazine The Diplomat has some scepsis about this hastily organised meeting between president-elect Trump and PM Shinzo Abe. “The transition process has just begun. None of his (Trump’s) top foreign and national security policy appointments are ready to be announced, let alone any positions that will be tasked specifically with managing relations with Asia. There are so many things Trump needs to sort out, including how to properly detach himself from the business empire he has built up to date during his presidency. In other words, he has much to do, and much to prepare, before he starts meeting with foreign leaders, either as a president-elect or the new president. In a time like this, seeking a meeting too early can be counterproductive.”
  • Economy / TPP / valuta
    • The TPP or Trans Pacific Partnership Agreement, a cornerstone of Obama’s policy to counter China’s economic influence in Asia, would cover around 40 percent of the global economy, and the United States and Japan would account for a combined 80 percent of the free trade bloc. Japanese resistance has been strong in the agricultural sector, particularly on the five so-called “sacred” agricultural products. However the United States has already agreed to let Japan keep its tariff on rice, wheat and sugar in exchange for Japan taking non-tariff measures to increase the imported quantities. But: with the election of Donald Trump, TPP has been declared dead and buried. Interesting to see that the Japanese lower house ratified the TPP this week, reports the Nikkei, while U.S. Senate Majority Leader Mitch McConnell threw water on the possibility of the U.S. Congress ratifying the TPP during the “lame duck” period between now and the end of President Barack Obama’s term in January, despite Obama’s earlier pledges to get the pact ratified on his watch. The TPP was (and still is) Abe’s best bet to propel necessary structural reforms in Japan, starting with the agricultural sector. The unlikelihood of TPP being realised soon also means less chances for far-reaching economic reforms in Japan. The “gai-atsu” (pressure from abroad) of TPP will be missed strongly. Would that mean that the simple equation goes like this: Trump = no TPP = no push for economic reforms in Japan = ongoing economic stagnation in Japan? The Nikkei reported that also a TPP without the U.S. as partner has being suggested …
    • The Yen – US dollar exchange rate is key for Japanese exports and strangely enough the yen noted lower in the first days after the election result became clear. That will change according to Eisuke Sakakibara, DUJAT Advisory Board member and a former deputy Minister of Finance, also known a Mr Yen.  “Trump’s ‘America first’ stance means weak dollar policies,” reports the Japan Times. “Gradual dollar weakness and yen strength are going to continue.” Sakakibara, who accurately predicted the currency’s advance this year from near 120 per dollar to beyond 100 for the first time since 2013, said the yen’s decline to a three-month low followed Trump’s toned-down rhetoric rather than a change in trends. The yen swung to a 0.5 percent loss against the dollar Wednesday from a surge of as much as 3.9 percent, the most since June’s Brexit referendum result, after Trump’s conciliatory victory speech. Sakakibara doesn’t expect increased fiscal stimulus to raise the U.S. debt level to beyond about 120 percent to 130 percent of gross domestic product, from around 105 percent currently, limiting any potential dollar strength. Instead, he says the yen could reach 100 by year-end. 
    • In an article in the Asahi Shimbun, I noticed thee different topics that will play a role in this new Trump-reality:
      • Trump has said he wants to withdraw the United States from the Paris Agreement on climate change. Japanese transport ministry officials are worried about the effects on international efforts to reduce carbon dioxide emissions by airlines operating international flights. An agreement is already in place to restrict such emissions from 2021, with many major countries, including Japan, the United States, China and European nations, saying they would take part. However, if the United States backs out from that agreement, the plan would lose effectiveness because of the large number of international flights operated by U.S. airlines. 
      • Trump has said he wants to cut U.S. corporate tax rates from 35 percent to 15 percent. Although Finance Ministry officials say Japan’s effective corporate tax rates are below those of the United States and France, they are concerned that further cuts may have to be made in Japan – and that could effect Japan’s already enormous budget deficit.
      • High-ranking economy ministry officials in Japan are worried about the nuclear agreement with the United States that will have to be extended after the current one expires in July 2018. Under the agreement, the United States has approved nuclear fuel exports and the use of plutonium in Japanese nuclear power plants under the condition that Japan does not develop a nuclear weapons arsenal. Trump once said he would not oppose Japan possessing its own nuclear weapons.
  • Trump Era
    • The Nikkei carried an interesting interview with Ian Bremmer, founder and president of the Eurasia Group, an influential think-tank with offices in New York City, Washington, London, Tokyo, Sao Paulo and San Francisco. “Trump’s foreign policy is going to look more “Chinese.” It’s unilateral. It’s transactional. It focuses narrowly on American national interests. Allies are useful as long as they’re giving you something that works, but common values don’t matter. The inside of countries … [it doesn’t] really matter whether they are authoritarian, state capitalist or democratic. He’s a businessman. And he sees international affairs like he sees his business transactions. “Whoever gives me the best deal, I’ll do business, and tomorrow if it’s somebody else, I move along.” There are a couple big problems, though. One is that other countries … are already questioning American credibility, and his approach is going to make them hedge, much more dramatically. Also, the U.S. will still have the world’s largest military. But the reason that other countries have looked up to the U.S. and have worked with the U.S. is not just about that; it’s also about values. They have aspired to be more like the United States. That’s already been weakening over the past years. But Trump really puts the nail in the coffin.”
    • In Japan Today an article on Trump’s dealing with Japan over the last decades. “During a press conference in Florida, on Feb 7, 1988, Trump jabbed at Japan as well as Saudi Arabia for pushing the U.S. into debt. “The Japanese are making us look like fools. If Japan is our ally, I’d hate to see our enemy.” Still, Trump admitted that he had dealt with them, but put the onus on American companies for making bad deals. “Economically, the Japanese took advantage of us more than anyone. It’s not that the Japanese are so good at it but our own people are stupid.” In 1993, while traveling to Asia on a business trip, Trump continued prodding the U.S. government to “be tougher” on Japan when it came to negotiations. Trump hoped Japan would “completely open their markets” and even proposed a product boycott if Japan failed to do so within 30 days … meaning simply that America would stop selling any and all of Japan’s products. Back then, he was simply working his identity as a tough negotiator, but his sentiments sure sound familiar in 2016.”
    • To finish this bi-weekly News coverage from and On Japan: rubber Trump masks are sold out in Japan, reports Japan Today. Ogawa Studios, the creator of the popular Trump mask, is one of the most popular manufacturers of rubber masks in Japan. They have everything from politicians to monsters to celebrities all available to wear via their special brand of not-quite-right-and-therefore-creepy rubber masks. But ever since Donald Trump’s recent victory in the U.S. election, sales of his mask have skyrocketed. Ogawa Studios sold out of the masks within a day, and has since put further sales on hold for fear that they wouldn’t be able to fulfil incoming orders. Now the question is: what do you do with a Trump mask? Japanese netizens offered up some of their theories: “These masks are perfect for end of the year parties with co-workers, or to give as a Christmas gift.” “Maybe Japan is getting ready for its own Trump-like revolution?” “I mean, if you’re going to buy a mask of somebody, then you want it to be someone important. And right now there’s no one more important in the world.” To quote Japan Today: this is Japan.

Have a good Sunday and great working week.

 

Radboud Molijn