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Editorial: Use TPP to promote structural reforms, propel growth

  • 2015-10-06 15:00:00
  • , Sankei
  • Translation

(Sankei: October 6, 2015 – p. 2)

 

 The 12-nation Trans-Pacific Partnership negotiations have finally ended in a deal. The framework is aimed at achieving a higher degree of liberalization and setting forth rules that can serve as a common foundation for the region. It is an ambitious accord because it could become a new international standard for the 21st century.

 

 With Japan facing such challenges as a shrinking population and decline in domestic demand along with flagging international competitiveness, it is extremely important to tap economic vitality in the Asia Pacific region. With the TPP encompassing 40% of the global economy, it must make the best use of the TPP economic sphere for growth.

 

 The TPP will also urge Japan’s dairy industry and other sectors that have been long protected by higher tariffs to undertake structural changes. The country must be prepared to carry out domestic reforms to make agriculture more competitive, for example.

 

 Credit should be given for the fact that none of the 12 members left the trade framework, though incongruities surfaced and the negotiations were on the verge of collapsing several times. They stuck to the framework because they knew the TPP is not a mere trade pact but offers strategic significance.

 

 The TPP is aimed at developing the Asia-Pacific region by making use of the economic foundations of Japan, the U.S., Australia and other liberal nations. In other words, it is about building an economic order that excludes China.

 

 China has been flexing its economic and military muscles across the globe. It is gaining steam through such initiatives as the establishment of the Asian Infrastructure Investment Bank.

 

 But many questions have been raised over its hegemonic approach. The economic policies implemented by the Communist Party-controlled government are arbitrary in many cases, and the rule of law is insufficient. Whether it can really build a transparent free market remains questionable. The TPP will thus function to keep it in check.

 

 There is no doubt that China will remain an important economic partner for the TPP members even after the deal is clinched. But with the global economy facing China’s economic slowdown and many other volatilities, it is important to build a new economic sphere for diversification of risk.

 

 Tariffs on dairy products, the data protection period for newly developed drugs, and rules of origin governing auto parts imports were major sticking points up until the very end of the negotiations.

 

 Negotiations such as the bilateral tariff talks between Japan and the U.S. dragged on and on because many TPP members were leaning toward protecting their domestic industries rather than meeting the ideal of achieving a higher standard of trade liberalization.

 

 This was unavoidable in the sense that they had to negotiate for national interests. But the essence of the trade pact will be lost if they continue to insist on winning or losing individual deals.

 

 The TPP is a comprehensive trade agreement that will not only improve market access but also sets forth rules on intellectual property, the environment, and competiveness to establish harmonious regulations. The active flow of people, goods, and money on a level playing field will help lift the entire economy in the region.

 

 The TPP is also essential for Japan to regain its strength so it can get back on track toward stable growth. The removal of tariffs is expected to help boost Japan’s exports and expand business opportunities for Japanese companies. This will help Japan find a way to counter the shrinking domestic market from a long-term perspective.

 

 The TPP will have a significant impact on the lives of the people. Imports of cheap yet quality products will benefit consumers. The impact of new rules governing copyright protection must be also gauged.

 

 The government of Prime Minister Shinzo Abe must focus on disseminating clear-cut messages to society.

 

 It must use the TPP to promote structural reforms of low-productivity industries, the most symbolic of which is agriculture.

 

 Throughout the negotiations, Japan had insisted on exempting key farm products, such as rice, wheat, beef and pork, from tariff elimination. Even in the midst of a serious butter shortage, the government tried to curb imports of dairy products, not for the benefit of consumers but for producers.

 

 The Japanese agricultural sector is facing a slew of problems, such as aging farmers, shrinking operations, and rising costs. Since the TPP is expected to boost imports of farm produce from overseas, the government will now shift its focus to formulating domestic policies.

 

 These policies, however, must be aimed at improving productivity and enhancing competitiveness. The goal of the government is to help farmers hone their management skills and raise income.

 

 One concern is that the government and the ruling parties may resort to pork barreling with a particular eye on the House of Councillors elections next summer. If they funnel money into the sector just to address farmers’ complaints, the momentum for change spurred by revisions to the agricultural cooperatives act may falter and the goal of strengthening Japanese agriculture will become even more distant.

 

 The TPP accord is not the ultimate goal. It is the starting point from which Japan will overhaul it social structures from scratch. The government is responsible for charting a path toward development based on this and carrying out reforms in a steady fashion.

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