US & Roping Japan Into Trans-Pacific Partnership

♠ Posted by Emmanuel in , at 11/10/2011 09:46:00 AM
There's a new article in Foreign Affairs by Bernard K. Gordon on further broadening the mooted expansion of the Trans-Pacific Partnership (TPP) to include Japan. Right now, the existing hole-hearted TPP includes trade-deal hungry countries Brunei, Chile, New Zealand and Singapore. The US is in a group of countries including Australia, Malaysia, Peru and Vietnam that is currently negotiating to join the TPP. A large part of TPP's appeal to America is that it includes many issues near and dear to the US alike intellectual property and services trade.

By contrast, I've been quite sceptical of this grouping from the get-go. The latest US tack is expanding a pre-existing Asia-Pacific "coalition of the willing" to ensure that it remains deeply involved in this fast-growing region. As I've mentioned though with regard to Hillary Clinton's recent and rather hackneyed speech on why the US should remain involved in this region, it's yet another in a long line of failed American initiatives to launch a broad FTA among APEC members. The latter have indicated time and again that they are more interested in capacity-building. Which, to me, makes perfect sense insofar as LDCs need to have the infrastructure to handle trade liberalization before actually undergoing it.

At any rate, Gordon now sees the inclusion of Japan as crucial to ensuring that TPP encourages bandwagon effects and produces tangible gains for the US:
  1. First is the fear generated by the U.S. free trade agreement with South Korea. [For instance, having the tariff applied in America to Korean automobile imports reduced from 2.5% to nothing.] Japan’s export industry has long been worried about near-identical Korean products in foreign markets, and Seoul’s access to U.S. consumers will only grow once the pact is implemented.
  2. The second element is the declining political clout of Japanese agricultural interests. This group was long opposed to a free trade agreement with the United States because it feared that Japan’s small-scale and highly protected farmers would be overrun by lower-priced imports. But agriculture now accounts for less than 1.5 percent of Japan’s GDP, which has also meant a sharp decline in farm-related employment. The need to rebuild the economy in the wake of the March disasters amplified calls for reform of Japan’s outdated farming sector. This has eased the way for Japan’s exporters, led by the business federation Keidanren, to step up their pro-trade agenda.
  3. The final factor is China’s new foreign policy assertiveness. An early sign was Beijing’s revival, in 2010, of claims to islands in the South China Sea, an issue that has roiled relations between China and its neighbors since the mid-1990s. In 2002, China and its neighbors in the Association of Southeast Asian Nations agreed to resolve the claims multilaterally, but China later insisted on dealing bilaterally with each neighbor. China’s foreign minister argued at the time, “China is a big country and other countries are small countries, and that’s just a fact.”
While I acknowledge Gordon's Sinophobia in particular, is TPP expansion really a trade counterbalance to China in the region? In previous discussions, I certainly got the feeling that all APEC members were being welcomed to maximize America's bang for the buck in promoting its very expansion. Why is Gordon keen on antagonizing China where US previous efforts regarding TPP do not?

At any rate, the APEC leaders' meetings over the weekend will tell us more about the state of TPP. There already are signs that Japan may not be anxious to be involved as evidenced by its recent delay of an announcement to join TPP negotiations:
Japanese Prime Minister Yoshihiko Noda abruptly postponed a news conference Thursday at which he had been expected to announce that his government will join negotiations on a trans-Pacific free trade pact.

Japanese news reports say the prime minister planned to announce the decision to the Japanese people Thursday and personally notify U.S. President Barack Obama when the two meet in Hawaii on Saturday. But officials announced late Thursday that the Tokyo press conference has been pushed back to Friday.

Participation in the talks is highly controversial in Japan, where thousands of farmers and fishermen marched late last week to oppose membership in the Trans-Pacific Partnership . Politically powerful rice farmers, who have been excluded from previous Japanese free trade deals, are adamantly opposed.
Watch this space.