Japan and the United States would benefit from a bilateral free trade agreement but that may not happen for several years in the face of scepticism on both sides, US economist Fred Bergsten said Wednesday.
The timing was ideal to launch overall bilateral trade talks now that the world's two largest economies were showing strong growth and the dollar/yen exchange rate is nearing equilibrium, Bergsten, director of the Washington-based Institute for International Economics, told journalists.
"It is time for the two countries to return to a positive agenda to strengthen their economic relationship," said Bergsten, known for his influential currency market comments.
Under a free trade agreement (FTA), Japanese consumers would benefit from lower prices and companies would have assured access to the country's biggest export market while Americans would gain by winning access to many sectors in Japan and boost their geopolitical presence in Asia, Bergsten said.
The United States and Japan have reversed their polices in recent years from pursuing a multilateral trade order to seeking bilateral free trade deals.
Washington is pushing for a regional framework, the Free Trade Area of the Americas, to continue seeking a leading role in world trade, after launching the North American Free Trade Agreement (NAFTA) with its neighbours Canada and Mexico.
Japan for its part has only recently begun to seek bilateral agreements with Asian countries and Mexico.
"NAFTA already discriminates significantly against Japan and was a major motivation for Japan to launch its FTA effort with Mexico," Bergsten said.
"Likewise, any Japanese FTAs with major Asian countries would have sizeable repercussions on the United States and induce it seek equal treatment".