Japan to enter negotiations on Asia-Pacific trade agreement, media reports say

March 13, 2013

Prime Minister Shinzo Abe will announce as early as this week Japan’s intent to enter talks on a major and controversial Asia-Pacific free-trade pact that would help open the door to the world’s third-largest economy, Japanese media reported Wednesday.

By joining negotiations on the United States-led Trans-Pacific Partnership (TPP), Tokyo would edge closer to Washington as a trade partner. The pact could strike down some of Japan’s notoriously high tariffs, allowing cheaper imports into the country. And it would expand markets for Japan’s major exporters, boosting an economy — stagnant for the past two decades — that has become Abe’s top priority during his three months in office.

Abe is expected to make the announcement on Friday, the Kyodo news agency and several major daily newspapers reported, citing unnamed government sources. But Kyodo added that if ongoing talks within Abe’s ruling party “get too heated,” the announcement date could be changed. Japanese officials often brief domestic media outlets before significant government decisions.

A Foreign Ministry spokesman declined to confirm the Japanese media reports, saying, “With regard to whether or not Japan will participate in the TPP negotiations, we are of the view that [the prime minister] will make the final decision based on the party debate and the consultations with the U.S. government.”

Japan has for several years debated whether to join negotiations in the TPP, which involves 11 nations. A majority of Japanese support the move, describing it as a long-overdue reform, but the pact faces major opposition from farmers, who think their sector could be decimated with any reduction of tariffs on agricultural goods.

For Abe, the TPP represents a major component of his economic strategy, which calls for inflation, followed by reforms. Abe has focused mainly on the first of those goals, using monetary easing and fiscal stimulus. But the reforms — especially the tariff reductions — are politically trickier, especially with a parliamentary election coming in July. Japan’s farm lobby staged a 4,000-person protest in Tokyo on Tuesday.

The International Monetary Fund has recommended that Japan join TPP negotiations while also pursuing additional reforms: reducing public debt, helping women in the workplace and removing certain government regulations.

Japanese officials say the TPP is vital to helping the nation keep up with faster-growing economies in Asia — particularly South Korea, an export-dependent rival that has struck free-trade agreements with the United States and the European Union. About 34 percent of South Korea’s total trade is conducted with nations under such partnerships, according to a Japanese government report. For Japan, only 19 percent of trade is with nations with which it has reached free-trade or economic partnership deals.

Japan’s participation in the TPP has been widely expected since Abe met with President Obama last month, a sit-down that focused heavily on the free-trade agreement.

In pushing for the TPP, the Obama administration has hoped other nations would join, adding to its economic weight and to its importance as a counter to China in the region. The addition of Japan to the negotiations would be a boon to U.S. arguments in favor of the treaty.

Abe had insisted that Japan would not join the negotiations if the country was forced beforehand to scrap all tariffs. But that stance was pure choreography, analysts say — a political move to earn a concession he already had. No country is asked to enter the negotiations under such terms.

A joint U.S.-Japan statement released after the summit said that should Japan participate in TPP talks, “all goods would be subject to negotiation” but that Japan “is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining” the talks.

Japan’s involvement would make the TPP a far more significant pact: Japan’s gross domestic product outweighs, by a hair, the combined GDP of the 10 other non-U.S. nations. The TPP also involves Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Some analysts suspect that Japan’s involvement could slow the talks as it tries to protect certain products — such as rice — that have long been subject to high tariffs. Some members of Abe’s party have demanded that some forestry, fishery and agricultural products be excluded from negotiation.

But Japan also stands to benefit by gaining easier access to natural gas from the United States. With most of its nuclear plants idled, Japan is seeking low-cost fossil fuels.

“There is no alternative other than for us to be there” in the negotiations, said Ichiro Fujisaki, a former Japanese ambassador to the United States.

Japan estimates that the trade deal would boost the nation’s annual GDP by 0.5 percent.

Chico Harlan covers personal economics as part of The Post's financial team.
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