Japanese Prime Minister Shinzo Abe has made a huge advance for trade liberalization in his country: Japan is on its way to join the Trans-Pacific Partnership (TPP). His decision in joining the TPP negotiation talk has delighted many, terrorized a few, and surprised all. Many eyeballs are locked on the next move of the world's third largest economy.
On April 20, Abe’s administration earned its final provision of approval from Canada, the last of the 11 TPP nations to formally grant permission for Japan to join the negotiation talks. With unilateral backing from the participant nations, Japan is expected to join the negotiations from the 18th round which is projected to take place in Malaysia on July 25.
Although Japan had joined the TPP discussions in November 2010 as an observer country, political leaders failed to consolidate a plan to join the treaty negotiations until March 2013 when Prime Minister Abe stepped in.
Many critics indicate that one of the major obstacles that hindered the past Prime Ministers’ efforts in joining the TPP was the heavy opposition from the agriculture sector in Japan. Japan Agriculture (JA), the national network of local farm co-operatives and one of the nation’s most powerful lobby groups, had played a crucial role in stopping the administrations from stepping into the TPP. They advocate the right of domestic farmers by supporting high import tariffs on agricultural products, including a 780% tariff on rice. The farm industry has continually warned the public that the Japanese rice production would decrease by 90-percent with the entrance of the cheap American agribusiness rice products.
Prime Minister Abe addressed that he will bring the domestic farmer’s issues to the negotiation table, pledging to safeguard Japan’s interest. Prime Minister Abe remarked that what Japan should really fear is not the collapse of agriculture but the “consequences of doing nothing.”
Prime Minister Abe reminded the public that joining the TPP is the key to reviving Japan’s struggling economy. Not only does it provide new market access opportunities for Japanese exporters amongst the TPP countries, the TPP will lead lawmakers to drive domestic economic reforms through various channels. Japan's inclusion in the TPP is expected to liberalize the country's manufacturing and service sector by lowering tariffs rates on goods and eliminating border regulations, fostering greater competition and increase productivity of the economy. Analysts in the Abe administration estimate a considerable boost in Japan's GDP after their inclusion in the TPP, but at a cost of potentially damaging the agriculture industry.
Japan’s participation in the TPP has delighted Washington in the past month. Since the United States does not yet have a Free Trade Agreement with Japan, the new TPP relationship with Japan would bring fresh economic benefits to the American companies in the form of boosted exports and increased Japanese FDI in the U.S.
Fumihiko Sugie, Trade Associate