Japan stands in contrast to fast-growing nations on Obama's tour

President Obama did not achieve his chief goal at the G20 Summit of completing a free trade agreement with South Korea.
Japan's weak economy provides a stark contrast to the expanding markets of the other countries on President Obama's tour of South and East Asia this week.
By Chico Harlan
Washington Post Foreign Service
Friday, November 12, 2010; 7:02 AM

TOKYO - Marking the final stop on his 10-day tour of Asia, President Obama arrived Friday in the country that least fits his vision of the region's growth. Obama speaks of Asia's "amazing success stories and rapidly expanding markets," but in Japan, those notions are memories rather than aspirations. He views Asia as a catalyst for the U.S. economic recovery, but Japan's economy serves more as a cautionary tale of mismanagement.

As host for Obama's visit and an Asia-Pacific Economic Cooperation summit in Yokohama this weekend, Japan is in the spotlight, flaws on full display. Its alliance with Washington still shows some bruise marks. Its ongoing territorial dispute with China has strained a vital economic relationship. Its gross domestic product is crawling. Its population is shrinking. Its government appears increasingly at a loss for solutions.

If they see eye to eye on little else, Japan's leaders agree that their country is falling behind. They see South Korea beating it to free-trade agreements - Seoul's failure to reach a deal with Washington this week notwithstanding. They hear Obama's speech in India, where he called that country's two-decade economic surge "one of the most stunning achievements in human history." They note that Obama hosted a joint news conference in Jakarta with Indonesia's president - something he won't do with Japanese Prime Minister Naoto Kan, in part because of a dispute over a relocation plan for a U.S. Marine base in Okinawa.

Obama landed in Japan on Friday evening, and went straight to his hotel. His schedule Saturday includes a speech at the CEO Business Summit, one-on-one meetings with Kan and Australian Prime Minister Julia Gillard and participation in the APEC summit. He leaves for Washington on Sunday.

For Japan, playing catch-up is complicated, with acrimony stalling even well-intentioned efforts to adapt. The challenges have been reflected most recently in Kan's attempts to endorse a key Pacific free-trade agreement, already backed by the United States, that would overhaul the way Japan does business in the region. An editorial in the influential Yomiuri Shimbun newspaper not only advocated for the TransPacific Partnership (TPP) but suggested that Kan use the APEC summit to express Japan's unequivocal interest in joining. But that appears unlikely to happen.

A window on challenges

Last week, Kan released a policy paper emphasizing the importance of economic partnerships at a "watershed moment in history." The brief went on to describe the numerous partnerships being formed among major trading countries and the sense that Japan is "falling behind."

Yet the policy statement managed to disappoint both opponents and advocates of the TPP, a framework that involves nine countries and would eliminate tariffs and trade barriers within 10 years. Because the brief did not actually declare Japan's interest in the agreement, only proposing fact-finding consultations with TPP member countries, many business leaders saw it as a missed opportunity for decisiveness. But the sharpest acrimony came from the agricultural sector, the longtime granddaddy of Japanese politics, traditionally protected by high tariffs on imports such as rice and butter. With those tariffs obliterated, about 3.4 million farmers could lose their jobs, Japan's main agricultural group says.

According to analysts, the TPP debate offers a window into Tokyo's political challenges, with a new-on-the-scene ruling party and a divided parliament. One day after Kan held a cabinet meeting to approve consultations for the TPP, about 3,000 people - mostly farmers from across the country - gathered at a Tokyo amphitheater for a protest rally. A sign draped across the stage described it as an "emergency meeting." The farmers wore bibs with messages decrying free trade. One held a cornstalk. A vegetable farmer, Shinichi Takahashi, 59, called himself a 10th-generation landowner feeling "grave concern" for the 11th. Most farmers have small-scale operations, limited by land constraints, and fear they would be obliterated by the large-scale farming industries in the United States, Australia and New Zealand. About 75 lawmakers, many from Kan's party, sat on the stage, where they heard agricultural co-op president Mamoru Moteki tell the crowd that a regional free-trade pact would cause the "complete destruction" of Japanese agriculture and forestry.

No clear path

In Japan, as in many industrialized countries, recent decades have brought a widespread abandonment of rural regions. The average age of Japanese farmers is now 65. Agriculture represents 1 to 2 percent of Japan's GDP, according to the World Bank. Even some farmers at the rally quietly acknowledged that something needs to change. They just prefer not to be hurt in the process. And they have the backing of numerous rural politicians.

Protected for years by enormous tariffs - rice imports, for instance, are hit with a 778 percent tariff - Japan's farmers would need massive subsidies if the country participates in free-trade deals. The debt-saddled government could ill afford that.

"I just can't see what the future is right now," said Takashi Sato, 36, a tomato farmer, said: "I feel a sense of crisis. Everybody else is participating in this [TPP], and if we don't, we'll fall behind even further. But I just don't see how we'll do it in 10 years - especially the farmers."

TPP talks began in 2006 among New Zealand, Chile, Singapore and Brunei. Subsequent U.S. involvement helped the network grow, and it now includes Malaysia, Vietnam, Peru and Australia. The United States sees a chance to conclude negotiations next year.

Trade experts say the TPP would broaden the market for Japanese cars and electronics, a needed development given South Korea's economic agreement with the European Union and efforts to wrap up a free-trade deal with Washington. "Korea's quick move in signing these [deals] worries Japan," said Takashi Terada at Tokyo's Waseda University. "Korea is getting zero-tariff benefits, and Japanese exporters feel very strong disadvantages."

Special correspondent Akiko Yamamoto contributed to this report.

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