A set­back for Ja­pan and sat­is­fac­tion for China af­ter trade bills fal­ter in U.S.

The Washington Post Sunday - - THE WORLD - BY ANNA FI­FIELD AND SIMON DENYER anna.fi­field@wash­post.com simon.denyer@wash­post.com Denyer re­ported from Bei­jing. Yuki Oda in Tokyo and Xu Jing in Bei­jing con­trib­uted to this re­port.

tokyo— The fail­ure of a pack­age of trade-re­lated mea­sures Fri­day in the House was a blow to Pres­i­dent Obama, but it was also a blow to his ally, Ja­panese Prime Min­is­ter Shinzo Abe, half a world away.

Abe has made re­viv­ing Ja­pan’s stub­bornly ane­mic econ­omy one of his top pri­or­i­ties, and forg­ing a wide-rang­ing trade pact with the United States, through the Tran­sPa­cific Part­ner­ship (TPP), was a key part of that goal.

For both coun­tries, the TPP has been viewed as a way to counter a ris­ing China. For the United States, it was a way to project in­flu­ence in Asia; for Ja­pan, it was a way to re­gain some of the eco­nomic might it has lost as China has gained.

For China, that means Fri­day’s ac­tions in the House counted as some­thing of a victory. “The out­come won’t af­fect China that much, but China would be happy to see it and chuckle un­der­neath,” said Shi Yin­hong, direc­tor of the U.S. Study Cen­ter at Ren­min Uni­ver­sity in Bei­jing.

The House voted down a pack­age of trade-re­lated bills as Democrats re­buffed Obama’s per­sonal pleas for their sup­port for his free-trade ini­tia­tive.

The pack­age in­cluded a mea­sure to give the ad­min­is­tra­tion “fast-track” ne­go­ti­at­ing author­ity con­sid­ered cru­cial to con­clude the Pa­cific Rim trade deal. This would al­low the ad­min­is­tra­tion to agree to a deal that Congress would ap­prove or re­ject, with­out the abil­ity to make amend­ments.

Ja­pan, the sec­ond-big­gest party to the deal af­ter the United States, has been count­ing on it to boost trade and to help the gov­ern­ment usher in much-needed re­struc­tur­ing — par­tic­u­larly in agri­cul­ture and au­to­mo­biles — that would be dif­fi­cult to in­sti­tute with­out the ex­cuse of out­side im­pe­tus.

Akira Amari, Ja­pan’s trade min­is­ter and lead ne­go­tia­tor in the TPP talks, said that the re­sult in the House made the sit­u­a­tion “ex­tremely del­i­cate.”

“It’s now very tough [to hold min­is­ter-level con­sul­ta­tions] at the ear­li­est pos­si­ble time,” he told re­porters Satur­day, ac­cord­ing to the Nikkei busi­ness news­pa­per. But he said there was also no need to be down­cast yet.

“We don’t need to be pes­simistic. We will closely mon­i­tor the ef­forts at the House of Rep­re­sen­ta­tives,” he said.

But Mainichi Shimbun, a left­lean­ing news­pa­per that has been skep­ti­cal of the deal, said that Fri­day’s fail­ure showed Obama’s weak­ness. “Obama couldn’t con­vince the Democrats,” the pa­per wrote. “That showed the deep sense of vig­i­lance against TPP within the Demo­cratic Party and Obama’s de­clin­ing force. A sense of un­cer­tainty spreads be­fore the sec­ond vot­ing.”

Mean­while, anti-TPP cam­paign­ers were ju­bi­lant. “Happy news,” tweeted Uchida Shoko, sec­re­tary gen­eral of PARC, a so­cial jus­tice group. “The U.S. House of Rep­re­sen­ta­tives re­jected TPP-re­lated bills! Let’s kill TPP!”

The de­lay could also be good news for South Korea, which has been seek­ing to join the talks, only to be re­buffed by the United States, which does not want an ad­di­tional ne­go­ti­at­ing part­ner at what it thinks is a late stage in the dis­cus­sions.

Seoul has been told to join the sec­ond round but is hop­ing that any de­lay will pro­vide it with an open­ing to join the talks. South Korea al­ready has a bi­lat­eral trade deal with the United States, although the im­ple­men­ta­tion has some­times been rocky.

In Bei­jing, there was no im­me­di­ate of­fi­cial re­ac­tion to the mea­sure’s fail­ure, but ex­perts said there would be quiet sat­is­fac­tion at the prob­lems the United States was en­coun­ter­ing in its at­tempts to project in­flu­ence in Asia.

China has not been in­cluded in TPP ne­go­ti­a­tions, and U.S. of­fi­cials have of­ten tried to pro­mote the pact at home as an at­tempt to counter China’s in­flu­ence. As a re­sult, many of­fi­cials in Bei­jing had viewed the TPP with sus­pi­cion, as part of an Amer­i­can “pivot” to Asia de­signed to con­tain China.

Some mod­er­ates within the gov­ern­ment, how­ever, had ex­pressed in­ter­est in join­ing it in the fu­ture, as a way to en­cour­age pro-mar­ket re­forms within China and deepen Asian eco­nomic in­te­gra­tion.

In­re­cent months, those feel­ings had in­creas­ingly given way to in­dif­fer­ence, as China launched its own ini­tia­tives to project its lead­er­ship in Asia, in­clud­ing the Asian In­fra­struc­ture In­vest­ment Bank, Pres­i­dent Xi Jin­ping’s Silk Road plans and its own pro­posed Free Trade Area of the Asia-Pa­cific.

“The fail­ure of TPP is a set­back for Obama’s diplo­matic strat­egy, be­cause ne­go­ti­at­ing na­tions might start to ques­tion the re­li­a­bil­ity of the United States,” said Shi, of Ren­min Uni­ver­sity, adding that Asian na­tions would now start to shift their at­ten­tion away from the TPP and to­ward the Chi­nese ini­tia­tives.

But Shen Guob­ing, a pro­fes­sor at the In­sti­tute of World Econ­omy at Fu­dan Uni­ver­sity in Shang­hai, said the TPP and the Chi­nese ini­tia­tives were not di­rect ri­vals.

“China’s in­flu­ence in the Pa­cific can­not com­pete with the United States right now,” he said. “So it’s hard to say if the fail­ure of TPP will help China to win more trust for its ini­tia­tives be­cause coun­tries in the Pa­cific know the sys­tems of the two big states are fun­da­men­tally dif­fer­ent.”

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