Japan agreed with the United States on Wednesday to enter negotiations toward a bilateral trade agreement, setting aside higher U.S. tariffs on Japanese auto exports that Tokyo feared would have a devastating impact on the economy.

The start of bilateral negotiations to lower tariffs signals a major concession by Japan to U.S. President Donald Trump, with Prime Minister Shinzo Abe having preferred a multilateral approach to addressing trade issues.

The agreement was reached in a meeting between Abe and Trump, who has expressed vexation over the huge U.S. trade deficit with Japan and has called for what he describes as more “reciprocal” trade.

“The agreement today will create a win-win economic relationship through the promotion of trade,” Abe told a news conference in New York where he attended the U.N. General Assembly.

Trump, for his part, said he is “happy” about the agreement.

“We’ve agreed today to start trade negotiations between the United States and Japan,” Trump said.

“This was something that for various reasons over the years Japan was unwilling to do and now they are willing to do,” said Trump. “So we’re very happy about that, and I’m sure that we will come to a satisfactory conclusion, and if we don’t, ohhhhhh,” he added.

Trump has made clear he is unhappy with Japan’s $69 billion trade surplus with the United States — nearly two-thirds of it from auto exports — and wants a two-way agreement to address it.

Autos and agricultural products are seen by both countries as sensitive items. Abe said he confirmed with Trump that Japan will be exempted from the potential imposition of tariffs on imports of cars and auto parts as long as trade negotiations are underway.

For agriculture produce, the United States “respects” Tokyo’s position that it will not make more significant concessions than those already agreed under existing free trade agreements such as the Trans-Pacific Partnership — a multilateral framework from which the United States has withdrawn.

“Trade restricting measures benefit no one. Japan and the United States have been benefiting from the free trade system and there should be no turning back,” Abe said.

The summit came amid growing trade friction among the world’s major powers, notably the United States and China.

Japanese officials have been worried that Trump will demand a reduction in Japanese auto imports, and fret that Trump could impose steep import tariffs on autos and auto parts, which would deal a big blow to the export-reliant economy.

“Actually I think we will probably come to a conclusion and I think it’ll be something very exciting,” Trump said.

“And Japan is very smart — great negotiators — and up until now they’ve done very well, and they’ll continue to do very well. We’re going to have a really great relationship, better than ever before on trade. I think it’s going to be better for Japan and better for the United States.

“It can only be better for the United States because it couldn’t get any worse because of what’s happened over the years.”

The Abe-Trump summit also touched on enhancing coordination over the complete denuclearization of the Korean Peninsula.

Following up on his unprecedented June summit with Kim Jong Un in Singapore, Trump has said he wants to meet the North’s leader again “in the not so distant future.”

The two leaders confirmed the need for bilateral cooperation following Kim’s pledge during the inter-Korean summit last week to permanently dismantle his country’s major nuclear complex if the United States takes unspecified reciprocal actions.

Speaking at the news conference to wrap up his visit to New York, Abe reiterated that he is ready to meet with Kim face to face and put an end to years of mutual distrust.

“Should any summit be held, it should be something that will contribute to resolving the abduction issue.”

Abe has made it a priority to settle the issue of the abductions by North Korea of Japanese nationals in the 1970s and 1980s.

South Korean President Moon Jae-in told Abe on Tuesday that Kim had said he was ready to engage in dialogue with Japan and improve ties at an appropriate time, according to South Korea’s presidential office.