Japan join trade talks as Abe defies voting bloc
Prime Minister Shinzo Abe said Japan will join negotiations on an American-led regional trade accord opposed by some of his core supporters as he seeks to boost growth and strengthen ties with the U.S.
“We are watching the birth of an economic zone that will account for about a third of the world’s economy,” Abe said at a press conference in Tokyo today. “If Japan alone remains inward-looking, it will have no opportunities for growth. Companies will not remain here and talented people will not want to work here.”
Abe’s decision, four months before elections to the upper house, risks alienating farmers who have traditionally backed his Liberal Democratic Party and fear being harmed by a free- trade deal. Abe is pursuing deregulation to help boost Japan’s international competitiveness and the trade pact may help companies like Nissan Motor Co. (7201) compete with rivals from South Korea, which already has a free trade deal with the U.S.
“Abe wants to use these talks to promote structural reform in Japan, help exporters and boost domestic productivity, but it’s a risky move because he is taking on a powerful interest group,” said Jeff Kingston, the director of Asian Studies at Temple University in Tokyo. “But with 70 percent approval ratings he has leverage to twist arms in the LDP.”
Japan’s participation would boost its gross domestic product by 0.66 percentage point or 3.2 trillion yen ($33 billion) if it abolished all tariffs, according to a government statement released today.
Abe’s move comes less than a month after he and President Barack Obama agreed that pledging to abandon all tariffs wasn’t a precondition to joining the talks. Obama has been pressing successive Japanese governments to join the 11-nation talks that aim to lower tariffs, strengthen patent protection and improve access to government contracts. At the same time, U.S. automakers have opposed Japan’s participation unless it eases market barriers they say restrict American sales.
Representative Sander Levin of Michigan, joined by 46 other Democrats, said in a letter to Obama yesterday that the automobile import market in Japan is unfairly closed to U.S.- made vehicles, and letting the nation join the regional trade deal would hurt rather than help address that imbalance.
Abe came in to office in December pledging to revive the world’s third- largest economy through aggressive monetary and fiscal stimulus to end deflation. Another component of his plan is reducing regulations to increase corporate investment and hiring, and joining the TPP could aid these aims, analyst Jun Okumura said.
“It serves as a form of outside pressure on the process as the Abe administration tries to implement deregulation,” said Okumura, a senior adviser to the Eurasia Group in Tokyo and former Japanese trade ministry official who took part in the Uruguay Round of world trade talks in the 1990s. “Japan needs to take part in these pacts with its partners and competitors.”