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Editorial: What is needed to lead the process for reaching a TPP agreement?

  • 2015-02-09 15:00:00
  • , Nikkei
  • Translation

(Nikkei: February 7, 2015 – p. 2)


 The Trans-Pacific Partnership (TPP) negotiations aiming at establishing a new framework for free trade have reached the final stretch. Japan and the U.S., which play a central role in the talks, have narrowed down the remaining issues through steady bilateral negotiations. Trade officials of both countries need to wrap up the negotiations and domestic coordination flexibly and carefully.


 We welcome the ripening of conditions for reaching a compromise in the bilateral talks, which had often ground to a halt amidst confrontation. It is impossible to find middle ground in negotiations for trade liberalization if both sides do not make concessions. Market liberalization and deregulation inherently come with domestic pain. The difficulty experienced in the talks was more due to the need to appease the domestic stakeholders rather than tough bargaining with the other side.


 The next few months will be the de facto deadline. Even if an agreement can be reached in the negotiations, the drafting and signing of legal documents will take months. Political maneuvering for the U.S. presidential election in November next year will start this fall, tying the U.S.’s hands. If this opportunity is missed, it is highly possible that the TPP framework may go adrift.


 Market liberalization on the Japanese side is focused on the most politically difficult issue of rice. Coordination is now underway to expand the special tariff-free import quota. Prime Minister Shinzo Abe will soon be facing a difficult political decision.


 However, setting a low-tariff or tariff-free import quota, not just in the case of rice, still runs counter to the principles of free trade based on market competition. While this might be inevitable for the sake of achieving a breakthrough in the negotiations, Japan must not slacken its efforts to reform domestic agriculture so that it can weather further tariff reduction.


 Automobiles are a difficult political issue for the Obama administration. Furthermore, it will not be able to reach final agreement with the other TPP participants unless it is able to obtain strong trade promotion authority (TPA) from Congress. It should have head-to-head talks with the Republican-dominated Congress and obtain TPA at an early date. Now is the time for President Barack Obama to show his mettle.


 It will be difficult both for Japan and the U.S. to coordinate domestic opinion. However, unless the two administrations exercise leadership at this important juncture, the historic TPP agreement will be an illusion.


 In terms of rule-making for trade, a gap remains between the U.S. and the newly emerging nations on the protection of intellectual property rights and on how to deal with state-owned enterprises. If the U.S. government simply speaks for the interest of certain industries, no agreement can be reached before the deadline.


 Now is the time for Japan, which is known for its skillful policy design, to play its role. It should mediate between the U.S. and the newly emerging states, come up with excellent ideas, and make its presence felt in the world in the new area of rule-making.

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