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POLITICS

Professor on impact of Amari’s resignation on TPP, economic policy

  • 2016-02-03 15:00:00
  • , Mainichi
  • Translation

(Mainichi: January 30, 2016 – p. 11)

 

 Interview with Keio University Professor Takero Doi by Akihisa Kudo

 

 Deliberations and procedures relating to the TPP agreement in the current Diet session are most likely to be affected by Amari’s resignation.

 

 Amari was a key player in facilitating the complex negotiations by 12 nations. When the U.S. was hesitant to reach an agreement due to domestic concerns, Amari persuaded the U.S. to conclude the negotiations, which was a rare case of Japan exercising leadership in trade talks.

 

 While Amari knows all the ins and outs of the complicated 12-nation talks, his replacement, Nobuteru Ishihara, was not involved with the negotiations. It is uncertain how well he can give accurate and appropriate responses in Diet deliberations. He is also likely to be required to give sensitive answers regarding policies in agriculture and other areas where there is a large number of stakeholders. If Ishihara gives ambiguous answers, Diet proceedings may come to a standstill with the opposition attacking him with tricky questions, and this may delay ratification. If Japan’s image of being a champion of the TPP and free trade is diluted, this may slow down foreign investment in Japan.

 

 Although political fund issues and the TPP do not belong to the same realm, the fact that the top negotiator was tainted by a “money” scandal may damage the TPP’s image. The government will have a tough job giving an explanation. This may become an obstacle in winning the people’s support for the TPP.

 

 Amari served as the control tower of the Abe administration’s Abenomics policies. This administration has made certain achievements in terms of massive monetary easing, inducing yen depreciation and stock prices increases, and improving business profits. However, the depreciation of the yen and stock prices increases have come to a halt recently. Since the growth strategy is still inadequate, I think the effects of Abenomics will weaken gradually. The government is facing a do-or-die situation with Amari’s departure.

 

 Amari adhered to the “rising tide policy.” His basic thinking was to increase revenue income through economic growth and achieve fiscal restructuring without having to increase taxation, such as raising the consumption tax. He is close to Prime Minister Shinzo Abe in terms of monetary and economic policy. However, Amari also listened to the bureaucrats and contemplated policies based on macroeconomic trends. His departure from the administration will mean even stronger Kantei dominance. I am concerned that there may be an increase in lopsided economic policies motivated by political or election considerations.

 

 On the other hand, Amari took the optimistic view that fiscal restructuring will move forward with economic growth. This differs from the Finance Ministry’s position, which emphasizes fiscal discipline. His resignation may be good news for fiscal restructuring.

 

 The government has been asking the business sector to increase wages and expand investment through the government-private sector dialogues, and Amari mediated these exchanges. However, the increase in wages and investments has been limited and has not really taken off. A shift toward the trend of increasing wages by improving productivity needs to be achieved for Abenomics to succeed. This will be a major issue for Amari’s successor Ishihara.

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