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US to begin trade negotiations with Japan, EU, UK

The Office of the U.S. Trade Representative formally notified Congress that it will negotiate three separate trade agreements with the EU, Japan, and the U.K., efforts that it said will aim to reduce billions of dollars in trade deficits, expand American exports and strengthen trade ties with several allied economic powerhouses.

U.S. Trade Representative Robert Lighthizer said in an Oct. 16 news release that the negotiations would work to expand U.S. global trade and investment.

"Today's announcement is an important milestone in that process," Lighthizer said. "We are committed to concluding these negotiations with timely and substantive results for American workers, farmers, ranchers, and businesses."

The notification formally begins a clock under the Trade Promotion Authority, or TPA, where the Trump administration will consult with Congress for 90 days before formally launching negotiations. Under TPA guidelines, the USTR is also required to publish objectives and solicit public comment at least 30 days before the formal start of negotiations.

In a letter sent to Sen. Minority Leader Charles Schumer, D-N.Y., Lighthizer said Japan is an "important" trading partner, but noted that the Asian nation is a "too often underperforming" export market for U.S. producers. Japan was the fourth-largest export market for the U.S. in 2017, totaling $67.6 billion, but Lighthizer said that U.S. automobile, agriculture and services exporters have been stifled by tariff and non-tariff barriers for "decades," which contributed to the $68.9 billion American goods deficit with Japan in 2017.

Following a meeting in New York in late September, President Donald Trump and Japanese Prime Minister Shinzo Abe said they would begin talks toward a bilateral free trade deal, with the U.S. identifying the auto sector as a key area of focus in negotiations.

The U.S. is also pursuing a trade deal with the European Union. The U.S. and the 28-member-state EU have annual two-way trade valued at $1.1 trillion, according to the USTR, but the agency has taken aim at the $151.4 billion goods trade deficit the U.S. ran with the bloc in 2017.

"Despite this significant trade volume, U.S. exporters in key sectors have been challenged by multiple tariff and non-tariff barriers for decades, leading to chronic U.S. trade imbalances with the EU," Lighthizer wrote in a separate Oct. 16 letter to Schumer.

Trade relations between the U.S. and EU have strained under the Trump administration, with the EU imposing tariffs earlier this year on a number of American staples such as orange juice and blue jeans in response to its inclusion on the U.S. tariff list for steel and aluminum imports. Trade tensions escalated throughout the summer, although the EU in late August offered to remove tariffs on all car imports in an apparent olive branch offering.

The third trade negotiation will be with the U.K., with which trade relations have been more cordial under Trump, including several meetings of the U.S.-U.K. Trade and Investment Working Group launched in July 2017. Lighthizer said in an Oct. 16 letter to Congress that a deal with the U.K. could help boost U.S. jobs and the American economy through expanded market access, although the U.S. ran a $14.2 billion goods trade surplus with the U.K. in 2017.

The U.K. cannot, however, formally begin trade negotiations until it has completed its exit from the EU on March 29, 2019.

As Congress prepares to consult with the Trump administration on its intentions in negotiations, several senators, including Senate Finance Committee Chairman Orrin Hatch, R-Utah, quickly weighed in.

"A trade agenda that prioritizes free trade and open markets is the best way to defend American interests and strengthen our economy," Hatch said in a statement. "I am pleased that the administration is pursuing new trade agreements with several of our most important trading partners in accordance with Trade Promotion Authority."

Senate Finance Committee Ranking Member Ron Wyden, D-Ore., expressed cautious optimism in his own statement, and warned against any partial deals.

"I welcome the administration's shift to focus on additional markets where there are barriers to U.S. exports and opportunities for made-in-America manufactured goods, agricultural products and services," Wyden said. "However, the administration must take the time to tackle trade barriers comprehensively, including using this opportunity to set a high bar in areas like labor rights, environmental protection and digital trade."