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Editorial: Japan should leverage the TPP to expand its network of high-standard EPAs

  • 2015-11-09 15:00:00
  • , Nikkei
  • Translation

(Nikkei: November 7, 2015 – p. 2)

 

 A [basic] agreement has been reached among 12 countries, including Japan and the United States, on the Trans-Pacific Partnership (TPP), and the vast potential of this trade pact is clear from the wide-ranging impact it is having.

 

 South Korean President Park Geun-hye and Indonesian President Joko Widodo have expressed to U.S. President Obama their nations’ desire to join the TPP.

 

 The 12 nations participating in the TPP together represent nearly 40 percent of global GDP, making the TPP the world’s largest free-trade area. Countries not part of the bloc seem to be increasingly concerned that failure to join the TPP could lead to missed opportunities for growth in the future.

 

 At the recent trilateral summit among Japan, China, and South Korea, the three leaders agreed to accelerate negotiations for a three-way free-trade agreement (FTA). Prime Minister Shinzo Abe’s statement that the three nations “should reach a comprehensive, high-level agreement as soon as possible” is significant.

 

 China and South Korea have already signed a bilateral FTA, and Chinese Premier Li Keqiang has told President Park that he thinks the China-South Korea FTA should be used as a model for the three-nation FTA.

 

 The China-South Korea FTA, however, excludes automobiles and many agricultural products from liberalization, and tariffs are removed on only about 90% of the goods traded between the two countries. In contrast, the TPP lifts tariffs on approximately 99% of goods.

 

 It would be very problematic if the China-South Korea FTA were used as the template for the trilateral FTA and a low-standard pact were the result. Leveraging the TPP, Japan should strongly urge China and South Korea to increase as much as possible the number of items for tariff abolition.

 

 The Regional Comprehensive Economic Partnership (RCEP) is now being negotiated among 16 countries, including Japan, China, South Korea, and India. At the talks, India and China stand out for their cautious stance on trade liberalization.

 

 We would like to see Japan, Australia, Singapore, and the other nations participating in both the TPP and RCEP join hands and take the lead in the RCEP negotiations so that an ambitious pact is formed.

 

 As for Europe, the European Union (EU) is negotiating both an economic partnership agreement (EPA) with Japan and the Transatlantic Trade and Investment Partnership with the United States.

 

 After a [basic] agreement was reached on the TPP, the European Commission, the executive body of the EU, announced it would initiate FTA negotiations with Australia and New Zealand. This is another move to harness the growth of the TPP economic bloc and is part of the chain reaction to the TPP. It is time for Japan to swiftly complete the EPA negotiations with Europe using the TPP as a bargaining chip.

 

 It has become easier for Japan to expand its network of high-standard economic partnerships drawing on the new trade and investment rules of the TPP. Japan should not miss this opportunity to develop multi-tiered diplomacy and accelerate overdue structural reforms at the same time.

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