Japan to Participate in TPP negotiations – March 2013
Summary
PM Abe announces that Japan will join TPP negotiations. This has the potential to accelerate opening up of the Japanese economy, and drive deregulation. Longer term, there may be some impact on EPA negotiations which begin on 25 March.
Detail
On 15 March, Prime Minister Abe formally announced Japan’s participation in the TPP negotiations with the US and 10 other Asia-Pacific countries. He said that this would be positive for the Japanese economy and “economic prosperity in the Asia-Pacific area”. Economic Revitalisation Minister Akira Amari will be the Cabinet member in charge of negotiations on TPP. While six countries have already approved Japan’s participation, Canada, Mexico, Australia, New Zealand and the US still need to agree. A ninety day consultation period for the US Congress will be required.
During the election campaign last year Prime Minister Abe said that ‘the LDP will oppose Japan’s participation in the TPP talks if the country is required to accept unconditional tariff elimination’. The TPP loomed large during Abe’s visit to Washington on 21-24 February. A joint US-Japan statement noted that it is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining the TPP negotiations.
Since then, there have been detailed discussions across government. The key question remains agriculture, and the government appears to be identifying key products for which they wish to maintain tariff barriers. Top among these is rice – currently subject to tariffs ranging up to 778% - but others include wheat, beef, dairy products and sugar. Other sectors are watching closely. Abe said today that both agriculture and Japan’s universal health insurance system would be protected in negotiations.
Joining the TPP will nonetheless open up several new sectors of the Japanese economy to competition. This is compatible with the new government’s overall reform approach, and may help it to pursue deregulation. On agriculture, Abe is talking of ambitious expansion of Japanese exports, notably in the organic sector. This will require major reform.
Japan is also expected to launch EPA negotiations at the EU/Japan Summit on 25 March, and is negotiating a wide range of other FTAs worldwide. These include the ASEAN+6 states, Australia, Canada and a trilateral agreement with China and South Korea. These will all encourage further opening up of the Japanese economy, both by eliminating tariffs and tackling non-tariff barriers (NTBs). Such barriers are often significant in Japan, even if international perceptions often lag behind the progress which has already been made in recent years.
Comment
Engagement on free trade is consistent with wider efforts to reinvigorate the Japanese economy. The current deadline for concluding TPP negotiations is the end of 2013. As PM Abe pointed out in his statement, joining now should make it easier for Japan to influence the overall architecture of the agreement.
Disclaimer
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