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  • Japan’s Step Closer to TPP

    Newscom

    Today, Prime Minister Shinzo Abe announced that Japan will officially join the Trans-Pacific Partnership (TPP).

    This comes a day after Prime Minister Abe received the okay to join TPP by his Liberal Democratic Party, a month after visiting President Obama and discussing the partnership, and more than a year since Japan first formally expressed interest. Despite backing for the partnership by his party, there is still strong opposition from major sectors in Japan as well as in the U.S.

    TPP is a trade agreement between 11 Asian–Pacific countries: the U.S., Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Its aim is to dissolve barriers to trade and investment and increase economic integration among the participants. The U.S. has been involved in the negotiations since 2008.

    That Japan now plans to join TPP is a big step. Previous prime ministers declined or were unable to bring Japan to this level in TPP talks. There are difficult negotiations ahead for Japan and the existing TPP countries, but it is not necessary for all countries to make immediate unanimous decisions concerning trade. For ascending to TPP though, it is first necessary for all the countries to agree on Japan’s joining.

    Japan joining TPP is not particularly popular. For Japan, TPP would have a huge impact on agriculture, a sector heavily protected by the government. Rice imports currently face a 778 percent tariff in order to artificially keep domestically produced rice more competitive. Agriculture lobbyists in Japan have huge sway over politicians and will be a problem when the talks get around to their industry.

    TPP will also mean making adjustments in the U.S. automotive sector, which is heavily protected and unionized. But it will enable the U.S. meat and dairy industries to expand their markets in Japan.

    Regardless, the overall benefits of TPP far outweigh any cost of adjustments the Japanese economy will experience. For Japan’s automotive and electronics industries, one of their major competitors in these industries is South Korea, which already has a free trade agreement with the U.S. TPP would enable Japan to match Korean competition in the U.S. and other markets.

    Posted in Economics [slideshow_deploy]

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