1. New Trade Organization To Be Formed
The President Trump’s decision of withdrawal from the TPP changes the trade environments under which PM Abe had been planning and promoting his trade policy. In order to respond the new paradigm, the Abe Administration firmly established a policy on January 25 to reorganize the incumbent TPP Headquarters to be a new trade organization in charge of negotiating the EPA with EU, the Japan-China-Korea trilateral FTA, the RCEP as well as the TPP follow-up and others. This new organization might also be in charge of a possible Japan-U.S. bilateral FTA because President Trump places bilateral FTA as the key axis of his trade policy.
This new trade organization is positioned at the Cabinet Secretary’s Office directly reporting to Prime Minister.
The number of its staffs is expected to be more than the present TPP H.Q. (80 staffs).
Right before this top meeting, U.S. Defense Secretary Mattis is scheduled to visit Japan to meet with his counterpart, Defense Minister Inada. PM Abe will receive Secretary Mattis’ courtesy call to talk about the possible agenda for the meeting with President Trump. Issues to be reflected in the agenda are as follows:
*U.S. withdrawal from the TPP
*Automobile trade issue specifically raised by President Trump
*Reassurance of the Japan-U.S. Security Alliance’s value and role
*Regional security environments including North Korea and China
*USMC Futenma Air Station’s transfer
3. First Trade Surplus Since 2010
The Ministry of Finance announced CY2016 trade statistics on January 25. According to the data, the Japanese trade recognized a trade surplus of 4,074 billion yen. It was a trade deficit of 2,792 billion yen a year before.
The reduction of oil price and the appreciation of yen contributed to a sharp reduction of imports. It has been six years since a trade surplus is recognized, namely the last surplus was marked in 2010 before the Great Eastern Earthquake of 2011, which eventually led to shutting down all the nuclear plants and importing oil and gas for thermal plants. As for the trade balance between Japan and the U.S., President Trump described Japan’s auto trade surplus unfair. The outstanding balance of Japan’s FDI to the United States is substantial after the trade conflict widely recognized in 1980s to 90s, creating more than 800,000 jobs in America, and the number is still growing, so the Japanese government and the auto industry are a little puzzled by the statement of the new president.
4. Saudi King to Visit Japan
If realized, it has been 46 years since the last visit of a Saudi King, namely King Faisal visited Japan in 1971. Saudi Arabia has been the largest supplier of petroleum to Japan. Due to the sharp declination of the oil price, the Saudi government is trying to diversify its industries avoiding the concentration on the petroleum industry. The King’s visit is speculated here to request for investment from Japan and economic collaboration for the sake of the industrial diversification.
5. MRJ Postponed Again
MHI President Miyanaga made a press announcement on January 23 that the first production unit of Mitsubishi Regional Jet (MRJ) would not be delivered in 2018 as currently scheduled but in the middle of 2020. He said that it was revealed that the present design of positioning the electronics of aircraft control and wiring has to be reviewed in order to make sure that the aircraft is certified without fail as the Type Certificate by the authority (FAA and JCAB etc.). This two year delay is the fifth of MRJ development delay. Currently, three test aircraft are undergoing flight tests in the United States. Around 400 MRJs are on order as of today including options.
Nobuo Yoneyama, Nisshin Global Corporation, 2-1-15 Hiroo, Shibuyaku, Tokyo 150-0012, Japan
Tel: 81-3-6450-6632, Fax: 81-3-6427-7729 Email: Yoneyama@nisshin-global.com