How the Trans-Pacific Partnership Benefits Japan

WASHINGTON, D.C. — Panelists at a discussion hosted by the Asia Society Policy Institute (ASPI) on March 9 agreed that the conclusion of Trans-Pacific Partnership (TPP) negotiations last October marked a major accomplishment for United States and Japanese cooperation and leadership in the Asia-Pacific region. Now, TPP countries are focused on getting the deal into effect — and are seeking approval of the agreement from their respective legislatures.

In his opening remarks, Japanese Ambassador to the United States Kenichiro Sasae emphasized how economic growth in both the United States and Japan depends on the increase in exports that Free Trade Agreements (FTAs), particularly the TPP, will facilitate. The challenge, he observed, is in getting the public to understand the crucial link between FTAs and economic growth. Statistics, he remarked, are too often not believed because economic growth seldom finds its way into day-to-day life.

Ambassador Sasae further pointed out the strategic benefits of TPP, calling it “a long-term blueprint for peace and prosperity for the Asia-Pacific.” The agreement strengthens regional relationships, particularly that between the U.S. and Japan, and creates new channels for diplomacy. The United States in particular, he argued, must be a part of TPP if it seeks to expand its influence in the region and maintain its status as a global leader. “How can the U.S. be the effective leader in the Asia Pacific without TPP?” he asked.

ASPI Vice President Wendy Cutler underscored the significant economic and strategic benefits that TPP will create, explaining how, in the context of the negotiations, the U.S.-Japan relationship transformed from “confrontation to cooperation.” Despite Japan’s hesitance to join the TPP and the United States’ initial reluctance to support Japan’s membership, the two allies were able to hammer out an agreement for high-standard trade. Recounting the many challenges faced in the actual negotiations, Cutler concluded that TPP was a balanced deal with high standards that could not remain intact in a renegotiation.

Deputy Chief Negotiator for TPP Ambassador Hiroshi Oe also underscored the importance of TPP both for economic and strategic reasons. He noted that given its depth and breadth, TPP “is by far the most important FTA ever concluded.” The ambassador indicated that the Japanese government had submitted TPP to the Diet earlier in the week, and said that it would likely be approved during the April/May timeframe. He said that while the Japanese are tough during negotiations, once they agree to provisions in a trade agreement they are committed to fully implementing them, adding that the broad reach of the agreement and its many moving parts makes it impossible to renegotiate. Ambassador Oe compared the TPP agreement to “very delicate and fragile glasswork; if you want to touch one part of it, that will destroy everything.”

Bruce Hirsh, Assistant U.S. Trade Representative for Japan, Korea and APEC Affairs at the Office of the U.S. Trade Representative, said that TPP represents “an opportunity to further integrate into the most dynamic, fastest growing region in the world.” A large round of tariff cuts across the board, coupled with the elimination of non-tariff barriers, gives the United States greater market access to agriculture, services, telecommunications, entertainment, investment, and financial services sectors, among others. Furthermore, he notes, the TPP establishes high-standard rules that will inspire even non-TPP parties to attempt to reach for higher standards.

Satohiro Akimoto, Senior Vice President and General Manager of Global Relations at Mitsubishi Corporation, explained the “conclusion of TPP is like a dream come true” for Japan because of the boost it will bring to business. The agreement will provide space for new business within Japan, particularly when it comes to agriculture exports. “Agriculture is regarded as an area that Japan needs to protect,” he remarked. But, he continued, it may be an area that Japan can take advantage of to give energy to the Japanese economy. Furthermore, TPP will provide a more dynamic and flexible business environment that will allow businesses to approach supply chain organization more strategically. Such changes play a key role in structural reform — the third arrow of "Abenomics" — and will be critical in revitalizing Japan’s economy.

James Fatheree, President of the U.S.-Japan Business Council, argued that as impactful “as tariff reductions are, the non-tariff measures that the TPP addresses are actually more important” for the U.S.-Japan business relationship. The rules will benefit both large corporations and small and medium-sized enterprises by facilitating trade, eliminating red-tape, and establishing a single window. Intellectual property provisions will protect trade secrets by criminalizing their theft. Furthermore, provisions that increase regulatory transparency in Japan will improve the ability of American companies to do business in Japan.
 

About the Author

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Molly Bradtke is a Program Associate with the Asia Society Policy Institute in Washington, D.C. and assistant to ASPI Vice President Wendy Cutler.