The House of Councillors has voted to ratify the Trans-Pacific Partnership (TPP) free trade agreement. It is difficult for the TPP accord to come into force as U.S. President-elect Donald Trump, who is pursuing protectionism, has declared that the United States will break away from the pact. Still, Japan's ratification of the agreement is significant in that it clarified Japan's stance to stick to the promotion of free trade.
Following the ratification, the government should try to persuade Trump to change his mind. At the same time, Tokyo should promote other trade liberalization talks to rebuild the world's free trade framework.
The Japanese government had initially aimed to take advantage of the Diet's ratification of the TPP agreement during the ongoing session to support U.S. domestic procedures for approving the accord. However, Trump's victory in the U.S. presidential race has drastically changed the situation.
Opposition parties, which are opposed to ratifying the TPP accord, criticized the ruling bloc for continuing deliberations on a bill to ratify the pact and relevant bills despite Trump's declaration that the United States will break away from the agreement. However, Prime Minister Shinzo Abe said, "The TPP would be finished if deliberations on the bills were to be terminated, and "I'd like to patiently hold consultations with Mr. Trump."
The prime minister has positioned the TPP as one of the pillars of his government's growth strategy. Therefore, he cannot easily give up on it. However, the TPP has great significance that transcends such political intentions.
The 12-country TPP would aim for high-level liberalization of trade and investment. The pact would set comprehensive trade rules in the Asia-Pacific region and contribute to growth in the area as a whole.
Trump is considering concluding bilateral trade agreements with many countries in the region rather than the TPP. Considering his aim for "America First," Washington could make unilateral demands from its trading partners including Japan. Some countries participating in the TPP call for the enforcement of the accord without the United States. In any case, U.S. withdrawal from the TPP would take the teeth out of the pact that would set comprehensive common rules on trade in the Asia-Pacific region.
Japan should use its ratification of the agreement as a springboard to speed up free trade talks other than those on the TPP to create an environment to pressure Trump to reconsider his decision to pull the United States out of the accord.
In moves toward another free trade framework, 16 countries including Japan, South Korea and India are negotiating the China-led Regional Comprehensive Economic Partnership (RCEP) agreement. Since the United States is not participating in RCEP negotiations, levels of liberalization to be achieved through the pact would be relatively low. Japan should play an active role in enhancing the levels of liberalization to be achieved through the RCEP pact.
Japan is also aiming to reach broad accord with the EU over an economic partnership agreement by the end of this year. It is necessary to make progress on talks on the pact from a comprehensive viewpoint despite differences over some sticking issues, such as Japan's import tariffs on agricultural products.
Japan approved the TPP, but problems involving measure to extend relief to farmers who would be affected by the TPP remain unaddressed. Many farmers are worried about liberalization of the agricultural market. Even though it is difficult for the TPP pact to come into force, measures to support farming households are indispensable in promoting free trade talks.
Close attention was focused on the issue during Diet deliberations on the TPP, but legislators failed to hold in-depth and specific debate on the issue because questions centered on how to respond to Trump.
The government has approved a plan to reform the National Federation of Agricultural Cooperative Associations in an effort to raise farming households' incomes, but questions remain about the efficacy of the reform. The government should clarify specific measures to strengthen the competitiveness of the farming industry in the future to dispel farmers' concerns about the liberalization of the agricultural market.