By Hiroyuki Tanaka and Shingo Sugime / Yomiuri Shimbun Staff Writers DA NANG, Vietnam — The broad agreement reached by the 11 signatory countries of the Trans-Pacific Partnership free trade pact following the United States’ withdrawal is of great significance for Japan’s trade strategy.
The TPP is becoming increasingly important because of China — whose influence is growing in the Asia-Pacific region — and the administration of U.S. President Donald Trump, which prioritizes the interests of its own country.
The TPP talks were originally led by the United States, with the rise of China taken into account. Similarly, Japan wants to restrain China by promoting high-quality trade agreements like the TPP pact and also keeping in step with Vietnam and Malaysia, both of which are members of the Association of Southeast Asian Nations.
For example, the TPP agreement includes investment rules such as a ban on preferential treatment for state-owned enterprises, taking into consideration the Chinese market, in which state-owned enterprises have a strong presence and investment environments are opaque.
In Asia, negotiations on the Regional Comprehensive Economic Partnership (RCEP) are under way in parallel with the TPP talks. The RCEP has 16 participant countries including Japan, China and South Korea.
Given that the RCEP does not have a high degree of trade liberalization, Japan hopes to put the TPP pact into effect — even without the United States — at an early date in order to avoid the RCEP progressing ahead of the TPP and becoming the norm in Asia.
The TPP is also important because it will serve as a bulwark against the United States, which has expressed eagerness to launch bilateral trade talks. Trump, who made his first visit to Japan earlier this month, has criticized trade with Japan as unfair and expressed dissatisfaction with the U.S. trade deficit.
A cautious view remains within the Japanese government that the United States will step up pressure in bilateral negotiations to increase exports of U.S. products to Japan.
A Japanese source familiar with trade issues said, “Japan has no choice but to continue trying to convince the United States that multilateral trade frameworks like the TPP pact will ultimately bring benefits to the United States.”
If the new TPP pact agreed to by the 11 signatory countries takes effect, Japan will be able to say that it will not make any further concessions to the ones it made for the TPP — even when bilateral trade talks with the United States begin.
However, the withdrawal of the United States, which has huge domestic markets, will reduce the economic effects of the TPP. According to an estimate by Prof. Kenichi Kawasaki at the National Graduate Institute for Policy Studies, a 12-nation TPP including the United States would boost Japan’s gross domestic product by 1.37 percent, while a TPP without the United States would increase it by 1.11 percent.
Establishing common rules among the 11 signatory countries, such as speeding up customs procedures and protecting intellectual property, will bring about the long-term benefit of making it easier for Japanese companies to enter overseas markets. Trade and investment in the Asia-Pacific region are also expected to be further boosted.
Some countries in Southeast Asia and other regions are said to be hoping to participate in the TPP. The TPP will further increase its influence in the Asia-Pacific region if the number of signatory countries increases.Speech