Japan’s Admission to the TPP Talks, Aung San Suu Kyi’s Visit

Politics Economy

Japan to Join TPP Talks in July

On April 12 the Japanese and US governments successfully concluded their bilateral consultations concerning Japan’s participation in the Trans-Pacific Partnership negotiations. In addition to confirming the objective set forth in their February 22 joint statement of “achieving a comprehensive, high-standard agreement, as described in the Outlines of the TPP Agreement,” the two governments agreed that they would work together to enhance economic growth, expand bilateral trade, and strengthen the rule of law.

In order to achieve these objectives, the two governments agreed that in parallel to the TPP negotiations they would address nontariff measures in areas including insurance and standards and would conduct negotiations on motor vehicle trade, regarding which the United States has expressed concerns, and that US tariffs on motor vehicles would be phased out over the longest period possible under the TPP negotiations. On April 20 the process of receiving approval from all 11 of the current TPP participants was completed; the expectation now is that Japan will join the negotiations in July.

Progress Toward Other Trade Pacts

Meanwhile, Japan has achieved progress toward negotiating free trade agreements or economic partnership agreements with a number of other key counterparts. On March 25, in summit discussions that were conducted by telephone rather than in person because of the Cyprus crisis, Japan and the European Union agreed to start EPA talks. And on March 26–28 the first session of talks was held in Seoul concerning a trilateral FTA among Japan, China, and South Korea; the decision to launch these talks had been reached at a trilateral meeting of trade ministers last November 20. At this first session the three countries agreed to hold working group sessions concerning merchandise trade, trade in services, and investment; they also determined that at their next session they would start talks on issues including rules of origin, customs procedures and trade facilitation, and competition. In addition, based on an agreement also reached on November 20 at a summit meeting of the ASEAN+6 countries (the members of the Association of Southeast Asian Nations plus Japan, China, South Korea, Australia, New Zealand, and India), the first session of talks on a proposed Regional Comprehensive Economic Partnership are to be held in Brunei this May, with a second session to be held in Australia this September.

Alongside these developments involving multilateral or regional FTA and EPA negotiations, progress has also been made toward bilateral agreements. Negotiations on a Japan-Australia EPA, which were launched in April 2007, during Abe Shinzō’s previous term as prime minister, had been stalled over the elimination of tariffs on wheat, beef, dairy products, and sugar, but in their telephone conference last December 28, Abe and Australia’s Prime Minister Julia Gillard agreed to work together toward prompt conclusion of an agreement, and early in April the two sides reached an agreement on a framework for beef and some other agricultural products, whereby Japan would maintain its high tariffs in principle but allow imports at lower tariff rates for quotas of the products in question. If the two countries can reconcile their remaining differences concerning automobile tariffs, they may be able to conclude a bilateral EPA as soon as this summer.

Japan and Canada started bilateral EPA talks last November, and at an April 11 meeting the two countries’ trade ministers confirmed their intention of getting the negotiations into full swing. Meanwhile, bilateral EPA talks with Mongolia started in June last year, and when Prime Minister Abe visited that country this March, the two sides agreed to work energetically toward the prompt conclusion of an agreement.

Enjoying the Benefits of Free Trade

To sum up, since Abe has come back to start his second term as prime minister, Japan has finally started to move in earnest to conclude FTAs and EPAs, both bilaterally and on a regional or multilateral level. The Doha round of multilateral trade talks under the World Trade Organization, which started in 2001, has ground to a halt because of disagreement between the advanced-nation camp represented by the United States and the EU and the camp of emerging and developing countries represented by China and India. In this context, the rules for trade in the twenty-first century will be determined largely by regional and multilateral trade and economic partnership pacts, such as the TPP, the Transatlantic Trade and Investment Partnership (for which the leaders of the United States and the EU agreed on February 13 to start negotiations), the Japan-EU EPA, the ASEAN+6 RCEP initiative, and the proposed three-way FTA among Japan, China, and South Korea.

To assess the importance of these various pacts, it is instructive to look at the shares of the world economy that their negotiating participants account for. The TPP, with the addition of Japan, includes 12 countries accounting for 38% of the global economy. The RCEP encompasses 28 countries with a 28% share, and the Japan-EU EPA extends to 34 countries and a 34% share. If the negotiations on all of them can be successfully concluded, Japan will have FTAs and EPAs with a majority of its key trading partners around the world and will be able to enjoy increased benefits from free trade without finding itself at a competitive disadvantage against other countries.

At the same time, we need to note that these various FTAs and EPAs fall into two broad categories. One consists of pacts centered on advanced countries, such as the TPP, the US-EU TTIP, and the Japan-EU EPA. The biggest significance of these pacts lies in their role in forming the rules for global trade in the twenty-first century. This has been noted as an objective of the TPP since an early stage, but it can also be seen in the case of the TTIP: The US-EU joint statement on the launch of TTIP talks declared, “Through this negotiation, the United States and the European Union will have the opportunity not only to expand trade and investment across the Atlantic, but also to contribute to the development of global rules that can strengthen the multilateral trading system.”

The other category consists of pacts like the RCEP and the proposed FTA among Japan, China, and South Korea (though the latter, in my opinion, will be difficult to conclude anytime soon). The purpose of these pacts is to support the regional production networks that have served as the engines driving the de facto integration of the East Asian economy over the past 30 years and to formulate rules that will promote the further expansion of these regional networks. In this light, the key point is to come up with agreements that will be easy for businesses to take advantage of. By taking part in the rule-making processes for FTAs and EPAs in both of these categories, Japan can maximize the benefits it enjoys as a country located in Asia, the growth center of the twenty-first-century global economy.

Aung San Suu Kyi and Japan

Aung San Suu Kyi, the symbol of the democracy movement in Myanmar (Burma), received a grand welcome when she visited Japan in mid-April. In addition to holding talks with Foreign Minister Kishida Fumio and Prime Minister Abe, she also had a meeting with Crown Prince Naruhito. The leader of Myanmar’s opposition was treated almost as if she were a head of state.

I have long believed that Suu Kyi places very low priority on Japan. And this assessment would seem to be confirmed by the record of the countries she has visited since 2011, when Myanmar shifted to civilian government and she was allowed to travel abroad. Her first destination was Europe, followed by the United States; she also visited Thailand, India, and South Korea before finally coming to Japan. (She has yet to visit any other ASEAN members except Thailand, which is quite puzzling when one considers how important the regional association is to Myanmar.)

Also, as I have noted the contents of her discussions with senior Japanese government figures, I have sensed that she probably disapproves of the way Japan and ASEAN, while not actively supporting the military government that ruled Myanmar for many years, tolerated this regime. It also seems likely to me that she has been very critical of the measures taken to resolve the problem of Myanmar’s outstanding debts to Japan and that she does not think well of the aid Japan has provided to Myanmar since the shift to civilian rule.

In addition, I have believed that she probably neither knows nor cares about the activities that Japan’s government and private-sector groups have undertaken to promote peace between Myanmar’s government and the country’s minority groups. Presumably the Japanese government invited her in full knowledge of her thinking on these matters and gave her a great welcome because of Myanmar’s importance. I hope that her visit has somewhat deepened her understanding of Japan’s relations with Myanmar and of the cooperation that our country has been extending to hers.

(Originally written in Japanese on April 20, 2013.)

diplomacy United States Shiraishi Takashi politics Abe Shinzō TPP Myanmar ASEAN economy trade