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Japan will tell United States to respect WTO rules - PM Abe adviser

By Stanley White and Izumi Nakagawa TOKYO (Reuters) - Japan will tell the United States in their economic talks that any border tax the U.S. government imposes on imports should not break World Trade Organization rules, an adviser to Prime Minister Shinzo Abe said on Wednesday. Yasutoshi Nishimura also said Japan would not rule out a bilateral trade agreement with the United States, but talks may not start soon because Washington is putting a higher priority on renegotiating the North America Free Trade Agreement. "We don't want any border tax to violate WTO rules by becoming a tax system intended to promote exports," Nishimura told Reuters in an interview. "Our position is WTO rules and multilateralism are important and we want to lobby for that." Abe and U.S. President Donald Trump agreed last month to establish a new framework for economic dialogue to discuss trade and infrastructure investment. The two countries have not set a schedule for their talks. Trump has spoken positively about a 20 percent border adjustment tax being pushed by Republicans in Congress as a way to boost exports, but it is still uncertain if he will fully endorse the proposal. Trump, who has lashed out at U.S. companies for moving operations and jobs to countries such as Mexico, had previously sent mixed signals on the border adjustment tax. Some Japanese policymakers grew concerned about U.S. protectionism and a return to 1980s trade friction after Trump criticised Japanese auto imports shortly after taking office in January. Trump has since softened his rhetoric on Japan following a summit meeting with Abe where the two leaders agreed to hold the economic dialogue. Japan's hopes to avoid trade friction by reminding Trump that the trade relationship has changed a lot since the 1980s, Nishimura. Japanese automakers now produce a lot of cars in the United States, which dovetails with Trumps repeated pledges to create more jobs, Nishimura said. Japan is interested in using the new dialogue with the United States to talk about infrastructure investment, boosting other types of direct investment and U.S. shale gas imports, Nishimura said. Some economists and policymakers are worried that the United States could use the dialogue framework to criticise Japan's currency policy and its aggressive monetary easing Nishimura expressed confidence that Japan could avoid such criticism, saying Japan needs easy monetary policy because it is still in deflation and that foreign exchange levels are determined by markets. (Reporting by Stanley White and Izumi Nakagawa; Editing by Chris Gallagher and Michael Perry)