Pence says new US-Japan talks could lead to trade deal

PIC: US Vice President Mike Pence (L) shakes hands with Japan's Deputy Prime Minister and Minister of Finance Taro Aso (R) following their joint press conference at the prime minister's official residence in Tokyo on Tuesday. (AFP)

The US and Japan on Tuesday launched economic talks that Vice President Mike Pence said could result in a bilateral trade deal, perhaps salvaging some elements of a now-abandoned trans-Pacific trade pact.

"At some point in the future there may be a decision made between our nations to take what we have learned in this dialogue and commence formal negotiations for a free trade agreement," Pence said at a joint news conference with Deputy Prime Minister Taro Aso.

"But I will leave that to the future."

Pence's comments came as the two countries kicked off talks aimed at achieving a new economic relationship -- in line with US President Donald Trump's vow to focus on bilateral trade deals rather than multilateral ones that he says have damaged the United States.

Trump's decision to scrap the ambitious 12-nation Trans-Pacific Partnership (TPP) deal championed by former president Barack Obama was a blow to Japanese Prime Minister Shinzo Abe, who expended substantial political capital to get the accord passed at home.

In Tokyo, there is still hope that the core of the agreement, thrashed out between the United States and Japan and intended to counterbalance China's regional economic power, can be salvaged in some form.

Pence, however, reaffirmed that there was no hope of reviving the TPP itself.

"The TPP is a thing of the past for the United States of America," he said.

"The Trump administration has made the decision and has taken steps to formally withdraw from the Trans-Pacific Partnership. And that will be our policy going forward."

'Win-win'

Pence said that Trump believes it is in the interest of the United States to negotiate trade agreements bilaterally.

"That creates a framework within which countries can better assess whether the deal itself is what we call win-win arrangement," he said.

Papering over differences, Aso made it clear that the terms of US-Japan trade had a regional dimension, perhaps holding out hope that any bilateral agreement could be eventually be expanded upon or at least not make other regional deals impossible.

"Japan and the United States can play a pivotal role in spreading high-level fair [trade] rules over Asia and the Pacific region," he said.

According to a White House economic advisor, who asked not to be named, there are elements of TPP that the administration may want to salvage, including Japanese concessions on the opening of agricultural markets.

"We would not want to lose the progress that was made in that area," the official said.

Aso said that the two countries had agreed to hold a second round of economic talks by the end of this year.

"I will continue having constructive talks with Mr Pence so as to deepen the win-win economic relations between Japan and the US," he said.

In keeping with the positive tone in public, neither side brought up the contentious issue of currencies.

Trump has taken other countries to task for allegedly manipulating the value of their currencies to seek trade advantages against the United States by selling their products cheaply.

He said last week that the "dollar is getting too strong" but also reversed course and said that China does not manipulate its currency, something he had said repeatedly on the campaign trail.