By Ken Endo, Professor, Graduate School of Public Policy, Hokkaido University
On Jan. 1 this year, the Regional Comprehensive Economic Partnership (RCEP) agreement came into effect as it was ratified by 10 of the 15 signatories in the Indo-Pacific region. This grouping will establish a free trade zone with a gross domestic product (GDP) that accounts for 30% of the world's total. This is more than twice the size of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was promoted by Japan.
Of particular significance about the RCEP is its integration of the three major economies of Japan, China, and South Korea. From auto parts to frozen rice, the interdependence between Japan and China will be deepened further. It is also significant that South Korea, which has high tariff rates, will immediately eliminate around 40% of its tariffs. Over the next 20 years, about 90% of tariffs will be eliminated in the region. With this setup, the construction of an intra-regional value chain that includes the Association of Southeast Asian Nations (ASEAN) will also be deepened. A team from the United Nations Conference on Trade and Development (UNCTAD) has calculated that Japan will benefit most from this agreement.
Where goods don't cross borders, they say, soldiers do. Interdependence makes war somewhat difficult. If it serves not only one's own economic interests but also one's security, it is a welcome development.
But this is only one act in the drama of the realignment of the broader order. In the midst of the structural confrontation between the United States and China, in the area of diplomacy and international security, a number of moves have emerged effectively targeting China. They include the formation of the U.S.-Japan-Australia-India Quadrilateral Security Dialogue (Quad), the new security framework of the U.S., U.K., and Australia (AUKUS), dispatches of naval fleets to the Indo-Pacific region by the U.K., France and Germany, and the signing of the Japan-Australia Reciprocal Access Agreement between the two countries' defense forces. On the economic front, the Japan-led CPTPP took effect in 2018 after the U.S. left, and then in the fall of 2021 China and Taiwan applied to join the economic agreement one after the other.
In this game of realigning the regional order, we are facing an extremely political phase in which each country's agenda is intertwined in the restructuring of the broader region. It is dangerous if we do not tackle the situation with determination. At the same time, it provides Japan with an opportunity to take the initiative in shaping the region.
There are multiple problems, but let's focus on the U.S. and China. First, while Japan is militarily dependent on Washington, it cannot rely too heavily on its political leadership.
Needless to say, China has been strengthening its military power substantially. In the past two decades, its military spending has increased around tenfold, and its technological progress has been significant. Because of its large size and willingness to change the status quo, it is the biggest source of instability in the region. The only way for Japan and the United States to control China is to deal with it jointly. In the medium to long term, Japan should work hard to reverse and reduce the military buildup in the region, but now is the time for Tokyo to correct various shortages, inclusive of people, money, and technology.
In addition, Japan must recognize that the leadership of the United States is wavering. The unilateral withdrawal from Afghanistan, the mishandling of an ally, France, in the AUKUS, and most of all its weak interest and involvement in the CPTPP have exposed the lack of a worldview and long-term vision of the current administration.
In particular, the future of the CPTPP is an urgent matter to be dealt with in the wake of China and Taiwan's applications for membership. But with the divisions in the ruling Democratic Party and public opinion and the distribution of the U.S. government's relevant bureaucratic authorities in different departments, American leadership on this front cannot be expected for the time being.
This may be the reason for the Japanese government's very visible cautiousness, to the point of weakness. Under normal circumstances, Japan should pursue the maintenance of Japan-China economic relations even in the midst of a U.S.-China confrontation. In fact, Japan has signed the RCEP. However, the CPTPP is facing the possibility of being influenced heavily by China, with Taiwan forever excluded, and member countries being divided over China's inclusion. Without U.S. commitment, it is difficult to see how to pursue the ideal solution of China and Taiwan joining simultaneously, as was the case with the Asia Pacific Economic Cooperation (APEC) framework.
However, now is the time for Japan to reconsider its risks and opportunities. Japan's national interest is to maintain a mutually beneficial relationship with China without alienating the United States, Tokyo's ally. And a platform to pursue this interest has become available as the RCEP took effect and the United States does not see it as a problem. This is where the CPTPP comes in. In this context, the CPTPP can be positioned as an additional framework of a higher order. China, which applied to join the CPTPP, has for the first time in a long time put itself in the position of being a "demandeur." This composition is not bad for Japan. After all, Japan is the leader of the CPTPP and has veto power as a current member, so it has little to lose even if China does not join.
Therefore, there is room for Japan and the rest of the world to take advantage of this opportunity to correct and mitigate the China problem.
It would be good to seek Japan's own interests by exporting agricultural products produced in Fukushima Prefecture and finished automobiles, but this is not enough. Tokyo should take this opportunity to move to prevent China from unilaterally deviating from universal rules. During the past decade or so, China has baffled many countries with its coercive economic diplomacy. The list includes Japan over rare earth materials and Norway over salmon in 2010, South Korea over tourism in 2017, Australia over barley, coal, and other items in 2020, and Lithuania over industrial products in 2021. This is an act of economic punishment for political differences, backed by China's huge market and purchasing power. It is necessary and desirable for Japan and the world to put some kind of a stop to it.
In light of China's traditional tendencies, this is a difficult enough task on its own, but it is also important to work to bring some relief to political and military matters as well. In urging a gradual reduction in the establishment of military bases, the flying of military aircraft, and the intrusion of (armed) fishermen and public vessels into politically disputed areas, it would do no harm to bring up the CPTPP membership application. To use a rather cold-hearted metaphor, take as much as you can before you let them into the room, and if the tactic does not work, let them stand in the hallway forever.
There is no point in bemoaning the inward-looking U.S. Nor should we be at the mercy of unilateral Chinese pressure. We must closely examine our risks and opportunities, and take steps, one by one, that Japan itself can take, from military to trade. This will lead to an easier life.