Daily Management Review

Japan wants US back in TPP


05/16/2017


Japan hopes that the US will return to the Trans-Pacific Partnership (TPP), and is only "pretending" to negotiate a bilateral deal, Kotaro Tamura of the Milken Institute told to CNBC.



Chatham House
Chatham House
"The Prime Minister and the government of Japan paid huge political capital to create the TPP, they do not want to lose it," said Tamura, who in 2002-2010 was a senator from the Liberal Democratic Party (LDP), led by Japanese Prime Minister Shinzo Abe.

"Of course, they pretended to talk about the Free Trade Agreement (FTA), but deep down they would welcome return of the United States", he told CNBC.

In an interview with CNBC on Monday, Abe confirmed that Japan will continue to promote the TPP after the US refused to participate in the agreement.

In January, US President Donald Trump signed a decree on the US withdrawal from the negotiation process for establishment of the Trans-Pacific Trade Partnership. In addition to the United States, the agreement would involve 11 other states. Trump called the TPP a "catastrophe" and claimed that the agreement was harmful to the US manufacturing sector.

The Japanese Prime Minister initially said that the TPP would be "meaningless" without the US, but recently Japanese officials joined Australia's calls for other 11 members of the agreement to act without the US.

Trump prefers bilateral trade agreements, arguing that such deals are more profitable.

However, Tamura, who was in California when Japanese officials met with representatives of the business community and US officials, told CNBC that, in his opinion, both Prime Minister Abe and Deputy Prime Minister Taro Aso are confident that the US will eventually return to the TPP.

Trump's decision to leave the TPP hindered implementation of at least some of Abe's structural reforms.

Abe’s administration took some measures to liberalize the strictly controlled agricultural sector. Prime Minister promised to achieve even greater compliance with TPP’s requirements, in part because of a possibility of access to large export markets, such as the US.

Reforming the agricultural industry has long been politically difficult for Japan. However, many agree that this is necessary in the country where food prices are considered relatively high due to inefficiency of this segment.

This may be one of the reasons why Japan proceeded to promote the TPP even after the US refused.

Japan was to become the main beneficiary of the TPP. It was especially true for the country’s automotive sector, which would receive cheaper access to US markets. Tokyo, which long lamented that the trade agreement would be "meaningless" without the US, decided to move forward with the other 10 member countries. However, many doubt importance of the TPP in the absence of Washington.

Having assumed his office, President of the United States Donald Trump immediately announced withdrawal from the TPP agreement, although former administration of Barack Obama was one of the main forces promoting the deal. However, the new owner of the White House concluded that the TTP gives unreasonable benefits to competitors, including Japan, and does not fully take into account American interests. Prime Minister of Japan Shinzo Abe tried to persuade Trump to reconsider this decision, but failed.

Agreement on the formation of TTP was concluded in February last year after seven years of persistent negotiations. Participants in this zone were to become 12 countries: Australia, Brunei, Vietnam, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, USA, Chile and Japan. The agreement can enter into force only after majority of the participating countries ratify the deal. However, only the parliament of Japan has done it so far.

source: cnbc.com






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