(Nikkei: July 8, 2015 – p. 8)
The enactment of the trade promotion authority (TPA) law in the U.S. on June 29 has given momentum to recent TPP negotiations. With this, the 12 participating nations will now be able to show their cards.
They are expected to speed up negotiations on tariff abolition and other issues of market access in bilateral talks. Japan and the U.S. are also scheduled to hold working level talks in Tokyo on July 9-10. Multilateral issues, such as trade rules within the region, may also be finalized at the chief negotiators’ meeting to be held as soon as July 23.
After working level talks narrow the gaps, a ministerial meeting to be held toward the end of July will aim at reaching a basic TPP agreement. There is a proposal to hold this meeting in Hawaii from July 28, so Japan and the U.S. would also like to settle the sticking points in their bilateral talks. If negotiations can be concluded, the participating nations may sign a TPP agreement around late October or early November.
The Shinzo Abe administration has designated the TPP as its top priority economic policy in the belief that the TPP will serve as a driving force for structural reform, which is the third pillar of Abenomics.
A TPP agreement will benefit businesses and households through tariff abolition and unified trade rules. In March 2013, before Japan joined the TPP talks, the Japanese government had estimated that the TPP will boost real GDP by 0.66%.
Reduction of tariff will push exports up by 2.6 trillion yen, particularly in the industrial sector. Streamlining of customs procedures and immigration procedures for businesspersons will also be a plus. Deregulation and so forth will improve productivity and this is expected to contribute to economic growth.
The impact of tariff abolition on agricultural products will not be uniform. Consumers will be able to purchase cheaper agricultural products with the increase of imports. Reduction of tariff on U.S. beef and pork is being discussed in the TPP talks, so this is also likely to benefit consumers.
On the other hand, certain domestic agricultural sectors protected by tariff will be hard hit in the short term. The government estimates a 3 trillion yen decline in agricultural, forestry, and fisheries production. After a TPP agreement is reached, the government will take a closer look at the specifics. It will make another estimate of the impact on domestic agriculture and study remedial measures as soon as possible.
However, in light of fiscal difficulties, measures to be implemented for the affected agricultural sectors are not expected to be on a scale comparable to those taken for the Uruguay Round agreement in 1993. (Abridged)