The Washington Post

Japan’s Noda delays decision on trade pact

With Japan’s ruling party still divided over a controversial regional free trade deal, Prime Minister Yoshihiko Noda on Thursday delayed for at least a day his decision on whether Japan should commit to the pact.

Joining the U.S.-backed Asia-Pacific free trade agreement could transform the world’s third-largest economy, slashing tariffs, allowing for cheaper imports and giving new opportunities for struggling exporters. But new foreign competition could also cripple the agriculture industry, whose many advocates — including those in Noda’s party — say the deal will threaten rural areas.

Noda promised to make a decision before taking off for this weekend’s Asia-Pacific summit in Hawaii, where he will meet with U.S. President Obama.

The Trans-Pacific Partnership (TPP), whose details still must be negotiated, involves nine countries, including the United States. Japan would become the 10th partner, and one of the most important.

Japan has long protected its farmers with high tariffs, particularly on rice. Though Japan’s farmers are aging, with many working part-time and operating small-scale plots, they hold inordinate weight in an electoral system that gives power to rural areas.

Roughly half the members of Noda’s ruling Democratic Party of Japan oppose the deal. But Noda, a former finance minister, has emerged as an advocate for the trade deal, saying that Japan should overhaul its agriculture sector and open its economy.

A government panel on Wednesday urged Noda to “think cautiously” about joining the pact, but offered no further recommendation. Chief Cabinet Secretary Osamu Fujimura told reporters on Thursday that Noda took that advice seriously, but added, “I don’t get the impression that the prime minister has changed his mind” about joining.

The move to join the pact would lend fresh help to Japan’s exporters, who are struggling under the weight of the strong yen and high corporate taxes. The TPP, once ratified, would eradicate all tariffs and trade barriers within 10 years.

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



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