The writer, a Republican, represents Wisconsin’s 1st Congressional District in the House, where he chairs the Ways and Means Committee.
When Japanese Prime Minister Shinzo Abe visits the White House this week, President Obama should offer him a warm welcome — and a friendly challenge. Right now, the United States is negotiating a historic trade deal with Japan and 10 other countries on the Pacific Rim, and one of the key remaining issues is whether Japan will open its agriculture and auto markets to U.S. products. While Abe is in town, the president should urge Japan to drop the trade barriers and close the deal.
This trade agreement, the Trans-Pacific Partnership, would give a boost to both of our countries. The TPP would tear down trade barriers that block U.S. exports to many Asian markets. This is a big opportunity for the United States. By 2030, Asia’s middle class will have grown to 3.2 billion people. That’s more than 10 times the projected size of North America’s middle class. If we want to create more jobs in the United States, we need to make more things in the United States and sell them overseas — to Asia, especially.
But Japan may need the TPP even more than we do. In the past 20 years, its economic growth has been close to nil, for a number of reasons: an aging population, a shrinking workforce and a rigid, overregulated economy. When he ran for office, Abe promised to slay this stagnation with the “three arrows” of his platform, now known as “Abenomics”: fiscal stimulus, monetary expansion and structural reform.
Abe has kept his promises — mostly. Last year, he approved a $29 billion stimulus package, big by Japanese standards. And the Bank of Japan has cranked up the printing presses: The yen is trading around its lowest level against the dollar since 2007. But the structural reform Abe promised has been slow to arrive. And no surprise, the lack of reform has meant a lack of results. Over the past six years, the United States has learned the same lesson: Spending and printing money can provide a sugar high, but only real reform can promote a healthy economy.
Luckily, a solution is within reach: the TPP. This high-standard agreement will require all member countries to dismantle many of the trade barriers that hobble their economies. Japan is a prime example. The country lays huge tariffs on American foodstuffs and erects all sorts of barriers to keep out American autos; some tariffs can exceed 700 percent. Japan lobbied hard to join the TPP talks but still hasn’t committed to eliminating these barriers.
To his credit, while campaigning for reelection last year, Abe pledged to complete the TPP. With his decisive victory, he can claim a mandate for closing the deal. But the world is still wondering whether he’ll make good on that promise. Abe has shown impressive leadership, but the farm lobby and car companies have a lot of sway in Tokyo. Japan will shake off its decades-long stupor only if it takes on the special interests and opens these crucial markets to its trading partners. Such change is always difficult, but the upside of removing these barriers far outweighs the downside.
Completing the TPP would strengthen Japan’s economy and its national security. The U.S.-Japan alliance is the hub of the Asia-Pacific order. The United States has pledged to defend Japan in case of attack, and in exchange, Japan allows the United States to station roughly 50,000 troops on its islands. As a result, U.S. forces can maneuver throughout the region, protecting sea lanes and maintaining order.
A rising China is trying to test the boundaries of that order by asserting control over disputed territory and pressuring its neighbors to grant special privileges to its products. In fact, China is negotiating trade agreements all over the world and trying to rig the rules in its favor. So our two countries have to ask ourselves, “Is China going to write the rules of the global economy, or are we?”
If the United States and Japan lock arms, we can resist China’s bullying and reassert leadership in the Asia-Pacific. In the long term, a successful TPP would be a sign of renewed vigor in our alliance — in which all our allies could take comfort. And in the near term, the clearest sign of a successful state visit would be a firm commitment from Abe to eliminate the farm and auto barriers.
The United States is waiting. The world is watching. And for both countries, the opportunity is huge. Shinzo Abe is a once-in-a-generation leader with a once-in-a-generation opportunity. He put it best when he said, “Without action, there can be no growth.” I can think of no better reason to drop the trade barriers and complete the TPP.