December 7, 2024

Japan Seeks to Join Pacific Trade Pact

TOKYO — Japan will seek to join negotiations for a wide-ranging, multilateral free trade pact with the United States and other Pacific nations, Prime Minister Shinzo Abe said Friday, giving heft to trade talks that could now encompass two-fifths of the world economy but also bringing on board a country with special demands and reservations that some participants fear will delay a final agreement.

In an impassioned televised address, Mr. Abe portrayed the Trans-Pacific Partnership as Japan’s “last chance” to remain an economic power in Asia and shape the fast-growing region’s economic future.

“Japan must remain at the center of the Asian-Pacific century,” Mr. Abe said. “The emerging economies of Asia are also opening up their economies.”

“If Japan alone continues to look inward, we will have no hope for growth,” he added. “This is our last chance. If we don’t seize it, Japan will be left out.”

But with strong opposition from Japan’s farming lobby and other powerful interest groups, Mr. Abe takes a big political risk in embracing the free trade talks. Japan’s largest agricultural cooperative has actively campaigned against trade liberalization, saying such a change would decimate the nation’s farms, a plea that has resonated among the wider public. Within his own Liberal Democratic Party, a majority of lawmakers depend on the rural vote and object to the free trade deal.

Mr. Abe is betting, however, that his strong popularity ratings will help him ride out the furor that has erupted among opponents. He will face his first test at the polls this summer, when national elections for Parliament’s upper house are due.

“I promise to take the best path forward for Japan’s national interest,” he said. “I will protect what we must protect, and demand what we must demand.”

To soften the blow of a more open economy, Mr. Abe has secured vague support from the United States that some Japanese agricultural products — like rice, which is protected by a 778 percent tariff — would be exempt from the free trade negotiations.

But insisting on these “sacred cows” could hurt Japan’s hand in negotiations elsewhere, especially in gaining further access to foreign markets for its manufacturers, which account for three- quarters of the country’s exports. Meanwhile, some participating countries worry that Japanese demands will slow the talks.

The lead negotiator for Singapore, Ng Bee Kim, said this past week at the latest round of Trans-Pacific Partnership talks that Japan would be allowed to participate only if existing members agreed it could “keep up the good momentum” at the talks.

It is unclear how much Mr. Abe is willing to commit to other structural changes the pact might demand of Japan’s economy.

Japan’s levies, which average 6.5 percent for its trading partners on most goods, are in line with those set by other industrialized nations. The exception is agricultural produce, on which Japan slaps an average 25 percent tariff.

But the partnership seeks not only to eliminate tariffs, but also to do away with other barriers to foreign trade, like cumbersome regulations — for which Japan is notorious — in fields including retail, health and autos that shut out foreign competitors.

Proponents of free trade say such overhauls could transform the Japanese economy for the better, making insular industries more competitive. Joining the Trans-Pacific Partnership would expand the Japanese economy by at least ¥3.2 trillion, or $33 billion — about 0.66 percent — the government estimated Friday.

Mr. Abe has made such structural reforms one of the three pillars of his economic growth strategy, together with an aggressive monetary policy and government spending.

“It’s a start, but a very welcome step for economic growth,” Ryutaro Kono, Japan economist for BNP Paribas, said in a note to clients.

Article source: http://www.nytimes.com/2013/03/16/business/global/japan-seeks-to-join-pacific-trade-pact.html?partner=rss&emc=rss