Trump’s America & Abe’s Japan – Concrete Proposals

By Jesper Koll of Wisdom Tree

Abe is preparing to offer a comprehensive “Japan–U.S. economic cooperation plan”

Japanese prime minister Shinzo Abe is poised to be the first global leader to present President Trump with a concrete policy proposal designed to shape and promote Trump’s “America first” agenda and, at the same time, to advance the U.S.–Japan alliance. After meeting the then-president-elect for the first time on November 17 of last year, Abe will meet Trump for the second time on February 10–11; and the prime minister appears very determined to impress the president by offering a concrete “deal” so that both countries can move from talk to action. If, as we suspect, the meeting goes well, the implications are bound to be positive for U.S.–Japan economic and financial relations.

In our view, Trump’s America and Abe’s Japan are a match made in heaven, not just because both leaders share a basic strongman leadership and “my country first” philosophy but because their economic and financial agendas are very much aligned: Team Abe is determined to make Trump look good by offering “funded by Japan but built by America” infrastructure projects. At the same time, Abe is expected to propose that the U.S.–Japan bilateral trade and investment relationship become a blueprint for a new global trade and investment agenda. Make no mistake: this could be a bold and forward-looking agenda that should help markets understand how a Trump-led global economic and financial agenda will unfold.

Here Is the Deal 

Specifically, according to Japan’s largest-circulation newspaper, Yomiuri Shimbun February 2, Abe is preparing to offer a comprehensive “Japan–U.S. economic cooperation plan.” Bottom line: This deal is designed to create a US$450 billion market in the U.S. through railway and infrastructure investments and create up to 700,000 U.S. jobs over 10 years1. Japan would offer to seed-fund these projects with low-interest loans, mobilizing resources from Japan’s public pension fund and other public lenders. In addition, the plan proposes that the U.S. and Japan work together to create new cross-border trade rules covering all aspects from e-commerce, intellectual property, government procurement, labor and finance, etc. In other words, after President Trump killed the Trans-Pacific Partnership (TPP), Abe proposes that the bilateral U.S.–Japan framework assert itself as the new forward-looking model for President Trump to lead global economic developments.

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