A Bit Less Lame Than US-EU FTA: Japan in TPP

♠ Posted by Emmanuel in , at 3/10/2013 08:35:00 AM
After the "who cares" of the US-EU FTA, here's something marginally more significant. There is no doubt that Japanese PM Shinzo Abe is seeking American favour in a very big way. The postwar US-Japan relationship has been characterized by lopsided deals to the former's advantage. Think of limiting Japanese exports to the US--consumer electronics, automobiles, you name it--when American producers could not compete. It was probably only a matter of time then that the LDP would lead Japan down this same road in US-led negotiations to enlarge the  Trans-Pacific Partnership (TPP).

We now receive word that PM Abe will make an announcement concerning Japan's TPP plans next week. It appears it's the same old, same old as far as the US goes in fearing Japanese auto exports in the event they are able to be exported tariff-free to the US. And just like then olden days when Japan was willing to strike unfair economic bargains since the US effectively left it with limited means of protecting itself militarily, the latest is that Japan will voluntarily accept the retention of tariffs on automobiles. It's the 80s all over again (I can hear Steve Perry over the radio right about now):
Japan will let the United States continue imposing tariffs on Japanese vehicles for now, a decision expected to help Prime Minister Shinzo Abe announce Japan's participation in talks for the Trans-Pacific Partnership free trade arrangement. The United States currently imposes a 2.5-percent tariff on imported passenger vehicles and a 25-percent tariff on trucks. Although a major premise of the TPP is to eliminate all tariffs in principle, Tokyo and Washington are maneuvering to allow exemptions of certain products that are politically sensitive at home.
Actually, there is a quid pro quo in play of Japan not lowering its towering agricultural supports--which begs the question of why you would even bother to join a free trade deal when it is riddled with escape clauses and opt-outs...
One reason Japan is compromising on the U.S. tariff is because Tokyo wants to maintain tariffs on various agricultural products. But if the U.S. tariffs are kept in place for very long, the merits to Japan of joining the TPP would weaken. For that reason, Japanese government officials want reassurances from Washington that the auto tariffs will eventually be eliminated.
Keep in mind that the economically moribund but politically influential US auto industry still fears Japan after all these years, while Japan's agricultural lobby remains fearsome and continues to be a key constituency for the LDP:
Yet amid the push from the top, resistance is expected from lobby groups in a potential stumbling block to a quick agreement. The “Big Three” U.S. carmakers of Chrysler, Ford and General Motors have reportedly opposed Japan’s entry into the TPP, arguing that the Japanese auto market continues to “lock out” U.S. vehicles.

Ahead of Japan’s summer upper house elections, Abe faces pressures from not only rice and other farmers, but also medical and consumer groups worried about the effects on the nation’s universal health care system as well as food safety. Defending the TPP, Abe told lawmakers on Wednesday that the universal insurance system was “a building block of Japan’s health care system and will never be shaken up....Relaxing individual food safety standards has not been negotiated either,” he added.

Consumer protection advocates have urged the Japanese government not to ease standards on food imports, including U.S. beef, labeling requirements on pesticides and genetically modified foods. Japanese farmers are also reportedly anxious to win exemptions from the TPP’s “zero-tariff” principle. According to agricultural cooperative JA Group, the elimination of tariffs would threaten Japan’s $48 billion in agricultural produce, making nearly all Japanese wheat, sugar and beef uncompetitive and wiping out a quarter of all rice production. The long-cherished national aim of “food security” would also be threatened, with the farm ministry estimating that reliance on imported food would increase to 90 percent from the current 60 percent.
Even if American and Japanese bigwigs do announce that Japan will now participate in TPP negotiations, I hardly think it's a done deal. Not only do they need to sort matters out bilaterally with contentious issues alike automobiles and agriculture, but the overall negotiations are also proceeding rather cautiously.

Ultimately, I think the official Chinese press reads things right: the main purpose as far as Japan is concerned is not trade creation but reinvigorating security ties with the US at a time of heightened security tensions with China over territorial disputes. Those North Koreans are looking pretty crazy too, so the perceived need by Japanese leaders to suck up to Uncle Sam via his pet project is understandable even if it has little to do with trade creation.