Japan Data

TPP Negotiations and Japan

Politics Economy

Negotiations are now underway for the Trans-Pacific Partnership, with an eye to concluding the free-trade agreement before the end of 2013. Japan only formally joined the negotiations at the final stage. Attention is focused on how well the country will be able to steer TPP rules in a direction that protects its national interests.

On March 15, 2013, Prime Minister Abe Shinzō announced that Japan will formally participate in the negotiations for the Trans-Pacific Partnership. The decision by the prime minister comes in the wake of intense domestic debate over the TPP. If the trade agreement is reached, the TPP will include a total of 12 countries, forming a huge trading bloc accounting for around 38% of the world’s aggregate gross domestic product.

Japan’s next round of TPP negotiations is scheduled for mid- to late July in Malaysia. This means that Japan will only have an opportunity to engage in the final two rounds of negotiations. During the negotiations to forge a final agreement before year’s end, attention will be focused on the extent to which Japan can play a role in creating trade and investment rules that best safeguard its national interests by maintaining existing tariffs on rice, wheat, beef, pork, and other key items.

FTAs and EPAs Sprouting Up Everywhere

In addition to the TPP, there are numerous other efforts to formulate rules for broad, free trade systems. Japan hopes to use these agreements as a means to benefit from growth in the Asia-Pacific region, while dealing with the area’s tangled web of national strategies and intentions.

The rules for transnational economic activity in the period after World War II were determined by the General Agreement on Tariffs and Trade and the World Trade Organization that grew out of that agreement. However, due to stagnation in the multilateral trade negotiations of the WTO that started around the outset of the new century, there has been a global shift toward Free Trade Agreements and Economic Partnership Agreements targeting specific countries and regions.

An EPA is an agreement that has at its core an FTA centered on the trade of material goods, but it also aims to construct broader economic relations. As of 2011, there were over 200 FTAs and EPAs worldwide to supplement the rules of the WHO. The TPP is one of the FTAs in the Asia Pacific.

Ever since its EPA with Singapore came into effect in November 2002, Japan has entered into an increasing number of FTAs and EPAs, including the signing of EPAs with the following 11 countries: Brunei, Chile, India, Indonesia, Mexico, Malaysia, the Philippines, Peru, Switzerland, Thailand, and Vietnam. At present, Japan is making progress in negotiations for EPAs with countries and regions, including an agreement with Australia and with the Gulf Cooperation Council. Starting in the spring of 2013, Japan also began negotiations on an EPA with the European Union aiming for a large-scale agreement to liberalize trade.

Paving the Way for Broader Economic Integration

There are also many proposals on the table for broad FTAs in the Asia Pacific. In March 2013, China, Japan, and South Korea began negotiations toward a trilateral FTA, despite their respective issues of concern on bilateral bases. In addition to the TPP spearheaded by the United States, there is the East Asia Free Trade Area, consisting of the 10 countries comprising ASEAN-member states, the members of ASEAN+3 (China, Japan, South Korea), and the Comprehensive Economic Partnership in East Asia that includes those countries plus Australia, India, and New Zealand (which constitute the other half of ASEAN+6).

In addition, there is the Regional Comprehensive Economic Partnership, a new initiative that combines these two ASEAN-centered trade pacts and rivals the TPP. The 16 participating countries entered negotiations in 2013, with an eye to forging an agreement by the end of 2015. The negotiations for both the RCEP and TPP also are paving the way for the Free Trade Area of the Asia Pacific that the APEC member states are aiming to introduce around 2020.