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Japan high on TPP, while US waffles

Issued: September 19 2016

Japan is holding steadfast on the Trans-Pacific Partnership, hopeful that the United States will ratify it this year.

The jury is still out as to whether the US Congress will ratify the Trans-Pacific Partnership (TPP). US presidential candidates Hillary Clinton and Donald Trump have each stated their opposition to the trade agreement, yet for President Barack Obama, the TPP would be an important legacy achievement. Unlike the candidates, Obama would very much like to see the agreement ratified before he leaves office in January 2017.

While US policy makers continue to waffle on the matter, Japan is holding steadfast. “We have not given up,” said Atsuyuki Oike, Japan’s deputy chief of mission (DCM) at Japan’s embassy in Washington.

Oike spoke to journalists during a press briefing at National Foreign Trade Council (NFTC) headquarters in Washington in mid-July. “Our hope is that the United States will ratify the TPP this year,” he said. “Our Prime Minister is determined to work on that.”

Oike emphasized that renegotiation of TPP is impossible. “There is a delicate balance because this is the most advanced free trade agreement ever negotiated,” he said.

He further outlined in detail that all countries involved made many domestic concessions in reaching an agreement for the TPP, and that there are economic and geostrategic benefits of the TPP. “For that and other reasons, I don’t think we can change it,” he said.

TPP negotiations were initiated in late 2008 and concluded last October. The signatories to date are the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together, these 12 countries account for nearly 36% of the global GDP.

“TPP countries account for 43% of all jobs supported by goods exported from the United States,” he added. “That comes to 3.1 million jobs supported by these countries and 1.1 million jobs in service sector.”

He stressed that these figures could be bigger in the future, however, given countries like South Korea, Thailand, and Indonesia have shown interest in joining the TPP.

Other reasons the US cannot renegotiate the TPP, Oike said, are investment policies regarding local content, technology transfer, royalty communications, and particular use of certain types of technology; competition policies, especially as they relate to protectionist purposes and stateowned enterprises (SOEs); and – most importantly – the rules of law outlined by the TPP that create transparency.

“Competition policies are the most important element in dealing with China,” he emphasized. “In the Geneva context, we are always fighting over subsidies, especially those in the form of concessional loans given to SOEs. The TPP is big in leveling the playing field.”

For years, Japan has been trying to negotiate a free trade agreement in Asia. “Then, the TPP came along. The TPP offered the pattern for a high standard for trade negotiations we had been looking for in Asia,” he said. “Gradually, countries came on board, one by one.”

While Oike was unwilling to discuss contentious issues US legislators and politicians have with the TPP, he stressed that Japan has made major contributions in the United States as a job creator.

In 2015, Japan invested US$31.1 billion in foreign direct investment in the United States, placing it second among the major G20 countries. Its FDI flow to the US has continued to grow steadily after the financial crisis that hit the United States in 2009. At US$411 billion, Japan’s cumulative FDI position in the United States is also the second largest behind the UK (US$484 billion), according to US Bureau of Economic Analysis figures. The Bureau also indicated that at US$3.117 billion, Japan was the largest source of “greenfield investment” in the United States in 2015.

Helping boost these figures are Japan’s investment in automobile manufacturing in the US. But Okie added that Japan has been creating 10 million jobs for the Chinese and making major investments in China as well.

When asked if Japan leaders’ concerns for a failed TPP were more strategic than economic, Okie said that in a symbolic context, US involvement in the region “is indispensable both in terms of security and economic.”

“While other arrangements are going on, the collapse of the TPP is something I do not want to think about,” he said. “China is already working hard on other arrangements. We have been advocating the rule of law, regulations, and transparency. Our endeavor for that will be frustrated. I don’t think anyone can get the same degree of high level agreement in the context as offered by the TPP.”


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