Exclusive: Japan eyes U.S. job, investment initiative ahead of Abe-Trump summit

[January 31, 2017]  By Takashi Umekawa and Linda Sieg

TOKYO (Reuters) - Japan is hammering out plans to show U.S. President Donald Trump its firms are ready to create U.S. jobs, according to a document whose contents were revealed to Reuters, as Prime Minister Shinzo Abe prepares for a summit where automotive trade will be high on the agenda.

Abe will visit Washington on Feb. 10 for the talks at which Trump is expected to seek quick progress toward a two-way trade deal.

An early draft of the document, called "U.S.-Japan Growth and Employment Initiative", listed five areas including infrastructure. The document, which was read to Reuters, did not mention automotive trade, which Trump has targeted as "unfair" in an echo of complaints by Washington decades ago.

The document left blanks for the numbers of jobs to be created and the scope of investment but a government source said several hundred thousand jobs could result.

It also referred to the idea of buying dollar-denominated "infrastructure bonds", a proposal that has been floated as a way Japan could take part in Trump's promised upgrade of U.S. infrastructure.

Japanese officials said they were still trying to assess just what Trump wants from Japan. In addition to singling out cars, he has also lumped Japan with China and Mexico as big contributors to America's trade deficit.

However, Japan's share of the U.S. global trade gap has shrunk to 9 percent from more than half in the early 1990s.

Automobiles and car parts account for about three-fourths of the overall U.S.-Japan trade gap, making it an easy target.

'BUY AMERICAN'

In a phone call with Abe on Saturday, Trump reiterated his pledge to create jobs in the United States and asked that the Japanese auto industry contribute, the Nikkei business daily reported, quoting unidentified Japanese government officials.

Abe is expected to meet Toyoto Motor Corp CEO Akio Toyoda this week, possibly on Friday.

"Mr. Trump has made a promise to 'Buy American, Hire American'," said one former Japanese diplomat. ”Symbolically, autos are a very big player."

The renewed focus on the automotive trade has some Japanese officials and media reminiscing - and not happily - about heated U.S.-Japan auto talks more than 20 years ago.

A last-minute deal in June 1995 averted U.S. tariffs on Japanese luxury cars when Japan's automakers crafted "voluntary plans" to boost purchases of American auto parts and expand U.S. production. That allowed the Japanese government to maintain its opposition to setting official numerical trade targets while letting U.S. negotiators also claim a win.

Japanese Prime Minister Shinzo Abe delivers his speech during a joint announcement on the return of American military to the island of Okinawa at the Abe's official resident in Tokyo. REUTERS/Toshfumi Kitamura/Pool

Yoshihiro Sakamoto, the top Japanese trade bureaucrat in those talks two decades ago, said such plans - drafted behind the scenes by the auto industry and trade ministry - could be a model for addressing the situation now. Some experts pointed out, however, the ministry's clout had waned since those days.

"What America wants is investment," Sakamoto told Reuters.

U.S. CAR INVESTMENTS

Toyota has come under fire from Trump for plans, announced in 2015, to shift production of its Corolla sedan from Canada to Mexico. Earlier this month, Japan's top automaker said it would invest $10 billion in the United States over the next five years, the same as the previous five years.

On Monday, Honda Motor Co Ltd and General Motors Co said they would jointly produce pollution-free hydrogen fuel cell power systems in the United States from around 2020. The companies said they would invest $85 million to add a production line at a GM battery plant in Brownstown, Michigan, and create 100 jobs.

Boosting output in the United States, however, could force Japanese car makers to make tough decisions about reducing production - and jobs - back home.

Central Japan Railway Company, or JR Tokai, has given the government estimates of how many jobs would be created by proposed high-speed Shinkansen railways in California and Texas and a high-tech "maglev" railway along the U.S. east coast, a JR Tokai spokeswoman said. She declined to release the figures.

Abe, who is close to JR Tokai Chairman emeritus Yoshiyuki Kasai, has touted maglev or magnetic levitation as a "dream technology" that could link New York and Washington in under an hour.

(Additional reporting by Kaori Kaneko and Ami Miyazaki; Editing by Bill Tarrant)

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