US Deputy Trade Representative Wendy Cutler said on Thursday last week that her country was not ready to launch free trade agreement (FTA) talks with Japan. It must be noted that the US is currently negotiating an FTA with South Korea. According to Ms. Cutler, the US was not ready to make a similar global trade deal with Japan at the moment. Although it was possible for both the US and Japan to close such kind of global trade pact, she said that it would not happen in the coming months.

It must be noted that Nippon Keidanren, which is the biggest business group in Japan, and US Business Roundtable urged the two major economies last month to launch global trade negotiations that would pave the way for a free trade agreement. A similar recommendation was also made by the US-Japan Business Council in 2006.

But Ms. Cutler pointed out five major factors that prevented both the US and Japan to reach such kind of global trade agreement. The challenges include: the unwillingness of Japan to reform its agricultural industry, resistance on the part of Japanese bureaucrats against the kind of liberalization demanded by an FTA, and non-tariff barriers favoring local firms and discriminating foreign companies at the same time. Meanwhile, the US needs to reform some of its anti-dumping policies and remove the Jones Act in order to be able to pursue an FTA with Japan.

Ms. Cutler also said that launching FTA talks between the US and Japan demanded a "strong political leadership" from the two parties. According to her, the two countries could do other measures to improve their global trade ties while they are preparing for the foundation of an FTA. Such measures include: increase protection on intellectual property rights in the Asia-Pacific region and reduction of trade barriers. She also said that the two countries needed to cooperate with each other in strengthening the APEC (Asia Pacific Economic Cooperation) forum and in bringing the Doha Round to a successful end.

Ms. Cutler serves as the key negotiator of the US in the country's on-going global trade talks with South Korea. She remains optimistic that the two countries would be able to complete the FTA talks and reach a global trade agreement. Although the US and South Korea have made progress in many areas, they still have to settle some differences in terms of the agricultural sector and beef.