Japan Wonders Whether It Is Worth Joining TPP Negotiations After All

from the as-everyone-should dept

The Trans-Pacific Partnership (TPP) agreement began as a cosy treaty between just three nations: Chile, New Zealand and Singapore. But once the US joined in 2010, this small-scale partnership suddenly became something much more significant. As USTR Ron Kirk put it in a press release at the time: The development of our negotiating positions will be a collaborative effort with elected leaders and stakeholders here at home, in order to shape an eventual Trans-Pacific Partnership Agreement that is a new kind of trade agreement for the 21st century, bringing home the jobs and economic opportunity we want all our trade deals to deliver. That "new kind of trade agreement" began to take shape as other major Pacific rim countries signed up: first Australia, Peru, and Vietnam, then Malaysia. More recently, Canada and Mexico have joined, albeit as junior partners with diminished negotiating powers. Another important player in the region that has expressed an interest in participating is Japan. But it seems that domestic politics may well scupper that plan: Prime Minister Shinzo Abe is facing challenges in handling the issue of Japan's participation in the talks for the Trans-Pacific Partnership free trade framework.



While Abe hopes to express willingness to take part in the talks during a summit with U.S. President Barack Obama set for late this month, he is still wavering on the issue due to strong opposition from within his own Liberal Democratic Party [LDP]. Here's where the problem lies: A strong backlash, however, is expected from some LDP members who are concerned the party will lose votes from agriculture-related sectors if Abe announces Japan's bid to join the talks. That's not really surprising; after all, in the same press release quoted above Kirk states quite bluntly: USTR will now intensify consultations with Congress and with American stakeholders to develop objectives for the Trans-Pacific Partnership agreement negotiations, in order to enter already-scheduled talks in March with a robust U.S. view that seeks the highest economic benefit for America's workers, farmers, ranchers, manufacturers, and service providers, and that reflects our shared values on labor, the environment, and other key issues But if US farmers and ranchers gain "the highest economic benefit", it's quite likely that those in the agricultural sector in the other TPP countries will lose out -- precisely what Japan's LDP members fear. Of course, the standard line is that free trade agreements are great because everyone gains, but the reality is not so rosy. Indeed, even the US has been suffering overall in the case of the recent FTA with South Korea, which is being held up as a model for future treaties: In the first eight months of the U.S. Free Trade Agreement (FTA) with Korea, implemented in March 2012, U.S. goods exports to Korea fell by nine percent (a decrease of more than $2.5 billion) in comparison to 2011 levels for the same months. Ironically, some of the biggest downfalls in U.S. exports occurred in the automotive and meat industries -- the two sectors that the Obama administration had promised would experience export growth under the deal. The decline in U.S. exports under the FTA brought a 21 percent increase in the U.S. trade deficit with Korea, in comparison to the same period in 2011. Using the same ratio employed by the Obama administration, this trade deficit expansion implies the net loss of over 16,000 U.S. jobs under just the first several months of the Korea FTA. Given the fact that the US economy has already been damaged by this recent FTA, the fears in Japan that its agricultural industry will be hit, the many concerns about TPP's investor-state dispute mechanism, plus its negative impact on online freedom and access to medicines, the question has to be: why bother with an overly-complicated, secretive treaty whose risks are many and real, while the gains seem few and uncertain?

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Filed Under: free trade, japan, tpp, us