The Trans-Pacific Partnership is sure to be high on the agenda as U.S. President-elect Donald Trump sits down with Japanese Prime Minister Shinzo Abe, who is determined to salvage a vital piece of his economic strategy.
Soon after deciding on Thursday’s meeting in New York, Abe directed senior foreign and trade ministry officials to take every opportunity to emphasize Japan’s focus on free trade, including the TPP. “Let’s do everything we can by Thursday,” he said. “We can’t let hopes for the TPP be extinguished.”
In a departure from his planned remarks before the Diet on Tuesday, Abe delivered a bit of commentary seemingly intended for Trump, centering on a Japanese adage translating as “a wise man changes his mind.”
“I’m of the view that leaders should not change their minds out of self-preservation, but rather swallow their pride and make decisions for the sake of their country and people,” Abe said.
Abe spoke with Australian Prime Minister Malcolm Turnbull by telephone Wednesday, stressing the importance of TPP signatories working on domestic ratification to show their determination to get the deal into force. The Japanese leader called for teaming with other member countries to urge the U.S. to approve the agreement. The idea of a deal without the U.S. has been floated among TPP members.
A Peruvian TPP negotiator sent an encouraging email to Japanese officials, saying Peru has already started down the path of free trade and cannot turn back. Peru will host an Asia-Pacific Economic Cooperation summit kicking off Saturday.
“It’s Japan’s turn again,” Abe, who will attend the forum, enthused at a meeting with senior Foreign Ministry officials. “We have an important role to play.”
An Abe aide said the prime minister has lined up two winning arguments for when he discusses the TPP with Trump: jobs and China.
With Trump pledging a massive increase in infrastructure spending, Abe aides have told the Ministry of Economy, Trade and Industry and other agencies to delve into related American demand and seek promising targets for Japanese involvement.
Trump’s vow during the campaign to exit the TPP was part of a broader theme of protecting American jobs. A contribution by Japan to U.S. employment could allay the president-elect’s misgivings about the trade deal. Japan is aggressively marketing its bullet-train technology for a planned high-speed rail project in Texas.
Abe also intends to capitalize on Trump’s hard-line stance toward China. The prime minister warned Tuesday that if the TPP founders, “there would certainly be a pivot to the Regional Comprehensive Economic Partnership,” a rival pact involving China but not the U.S.
A shift from the Trans-Pacific Partnership to the RCEP would give Beijing an opening to write the rules of global trade in Washington’s place, a risk that Abe plans to highlight to Trump.
A political lifeline
Abe’s economic policy has relied upon monetary stimulus, but that strategy is rumored to be reaching its limit, leaving the TPP as the government’s last option for growth. If the pact takes effect, the improved productivity expected from expanded free trade is estimated to lift real gross domestic product by 14 trillion yen ($127 billion) based on fiscal 2014 GDP.
Roughly 30% of Japan’s exports go to TPP members. But this figure would shrink to just 12% or so without the U.S., cutting the GDP boost in half. The trade deal’s failure would stymie government growth strategies predicated on its passage, and Abe’s plans for an extended stint at Japan’s helm would hit a stumbling block.
Opposition parties have criticized efforts to rush TPP ratification and related legislation through the Diet, arguing that the situation in the U.S. means Japan has no need to hurry.
“It’s not for the U.S.’ sake — it’s for Japan’s,” a frustrated Abe fumed to an adviser. “The opposition doesn’t understand that.”
The prime minister can take some encouragement from the government website created for the president-elect, which makes no mention of exiting the TPP and states only that the “Trump administration will reverse decades of policies that have pushed jobs out of our country.”
Kathleen Stephens, a former U.S. ambassador to South Korea, noted that President Barack Obama opposed a free trade agreement with the country, only to end up supporting it in office. The same could happen with the TPP, she suggested.
Deputy Prime Minister Taro Aso urged his close friend Abe to go into the meeting with confidence. “Before World War II, a nation’s strength was based on its size,” Aso said. “After the war, Japan and Germany grew in defiance of that conventional wisdom. Without a doubt, free trade supported that.”
“I’ve been borrowing those words a lot lately,” Abe replied.