(Nikkei: January 16, 2015 – p. 2)
The economy is a living thing. Trends in technology, modes of transportation, business models, and consumption constantly evolve. The advance toward globalization, where people, products, and money cross national borders, is unstoppable, regardless of how we feel about it. The trade order must also evolve as a framework that adapts to changing economic conditions.
Twenty years after the World Trade Organization (WTO) was launched, the WTO Agreement is proving to be anachronistic. Its weaknesses as international law are becoming evident. There is no denying that many countries are adopting self-centered trade policies in disregard of the interests of other countries, and that there are unfair trade practices which the existing agreement is unable to regulate.
Now is the time to revamp the rules and rebuild the trade order. Unfortunately, negotiations under the 150-member WTO are glacial. For now, the only option is for the willing countries to expand the network of free trade agreements (FTA)
The free trade scheme with the most ambitious goals is the Trans-Pacific Partnership (TPP) spearheaded by Japan and the U.S. It aims to make up for the WTO Agreement’s shortcomings in the areas of intellectual property rights, investment, competition policy, government procurement, the service industries, and so forth. It has the potential to become the model for trade rules in the 21st Century. Japan and the U.S. bear great responsibility in leading this effort to build a new order.
It is lamentable that these two countries, which supposedly share common goals, are bogged down in negotiations on the longstanding tariff issue. They should look at the world economy from a broad perspective and exercise leadership as major economic powers. They should reach an agreement in their bilateral talks at an early date to spur the overall TPP negotiations, which are on the brink of drifting.
A bilateral trade agreement between Japan and Australia has officially come into effect. While the seven-year negotiation process was tough, the Abe administration and the Abbott administration of Australia boldly held in check domestic opposition to reach this agreement. This is a good example of the successful conclusion of trade talks through a decision by
On the other hand, no significant progress has been made in the Japan-China-ROK negotiations that will be held in Tokyo this week. While liberalization in these three major economies is extremely important, none of them is very keen on reaching an agreement. Such lack of enthusiasm is partly due to the protracted TPP negotiations.
If a TPP agreement takes shape, other trade negotiations, including the Japan-China-ROK talks, will probably also gain momentum. Now is the critical stage for opening a new page in trade history. (Slightly abridged)