Japan’s parliament passes $142 bln stimulus budget
Tokyo moves closer to trade pact despite concerns
TOKYO, Feb 26, (AFP): Japan’s parliament on Tuesday passed a $142 billion extra budget that forms a key part of Prime Minister Shinzo Abe’s efforts to tackle the deflation that has dogged the economy for years.
The 13.1 trillion yen ($142 billion) package squeaked by the opposition-con- trolled upper house of parliament less than two weeks after the lower house approved the spending.
The measure is part of a wider stimulus package announced by Abe’s cabinet in January, after his Liberal Democratic Party swept December elections on a pledge to revive the world’s third-largest economy. The new money will be earmarked for various economy-boosting measures, including job growth, upgrading Japan’s ageing infrastructure, and rebuilding disaster-struck areas hit by the 2011 quaketsunami.
Plugging a public-pension financing gap was among the other spending measures.
The total package could top 20 trillion yen if spending by local governments and the private sector was included.
Japan’s economy shrank for a third straight quarter between October and December, leaving it mired in recession largely due to weak export demand, and stirring fears about its ability to cement a recovery.
Demand
Abe has pledged to pull Japan out of years of falling prices, which dampen demand and business investment, through big spending and aggressive monetary easing. He has pressured the Bank of Japan for such policy measures, with a new central bank chief set to be nominated as early as this week.
The hawkish prime minister has also said he would boost defence spending. Japan is embroiled in territorial disputes with China and South Korea, while an unpredictable North Korea jangled regional nerves earlier this month with its third nuclear test.
But the big spending plans have stoked fears over Japan’s already tattered fiscal health, the worst among industrialised nations, with public debt standing at more than twice the size of the economy.
Meanwhile, Japan has made clear to the United States that it is seriously considering talks on a sweeping Pacific trade pact, but Tokyo’s entry already faces fierce opposition in both countries.
Japan’s newly elected conservative prime minister, Shinzo Abe, sounded an increasingly upbeat tone on the 11-nation Trans-Pacific Partnership during a visit Friday to Washington despite tepid support from much of his party.
President Barack Obama has cast the Trans-Pacific Partnership as a centerpiece of renewed US engagement in Asia, saying that the emerging pact could boost growth and set rules to govern the dynamic but unwieldy region.
The participation of both Japan and the United States, the world’s two largest developed economies, would make the pact cover nearly 40 percent of the world economy and potentially offer a model for an elusive global trade accord.
But Japan’s agriculture lobby had fought the previous government over its desire to enter talks on the Trans-Pacific Partnership, fearing that unprecedented foreign competition would devastate a deeply rooted rice culture.
Abe’s Liberal Democratic Party, whose support bases include both farmers and big business, had said during the election campaign that Japan would only enter negotiations if certain sectors were declared off the table from the start.
In a carefully worded statement after Abe’s talks with Obama, the two countries said that “all goods would be subject to negotiation” if Japan decided to enter talks on the Trans-Pacific Partnership.
But the statement acknowledged “sensitivities” on both sides, particularly in agricultural and manufactured goods, and said that no country would be “required to make a prior commitment to unilaterally eliminate all tariffs.”