The Trans-Pacific Partnership free trade agreement (TPP), which was once on the verge of breaking down when the U.S. withdrew, has gathered momentum once again. The ministerial members of the remaining 11 nations reached a basic agreement to effectuate the reworked agreement without Washington’s participation.
It was unfortunate that the agreement could not be announced at the summit due to Canada’s last minute objection. The remaining members must indicate their strong solidarity through steady implementation of what was agreed on at the ministerial meeting.
The TPP is a free and fair framework for an economic order in the Asia Pacific region by member nations that have a solid foundation in free trade and a market-based economy. In light of China’s emergence, it is meaningful that Japan has been facilitating the effort to conclude a large-scale multilateral agreement that further strengthens ties between regional economies.
Canada’s unfortunate objection
This agreement will be an important cornerstone in responding to the trade strategies of the Trump administration, which rejected the TPP citing protection of domestic industries and overt ‘America First’ policies.
Japan has positioned the TPP as the foundation of its growth strategy. Although the scale of the trade agreement was reduced by the U.S. withdrawal, the TPP remains beneficial in accessing overseas markets. The government should leverage the advantages brought by both the TPP and Japan-EU EPA to maximize its growth potential.
Japan took a leadership role in driving the TPP negotiations. It even brought Vietnam around to the idea of TPP11 when the socialist republic began to waver. Japan’s representatives should be duly recognized for the appropriate role that they played as an economic power during international negotiations.
The TPP established high-level trading standards that not only eliminated various tariffs but also defined intellectual property and e-commerce rules. The reworked trade agreement cannot stray too far from the spirit of the original goals.
It is appropriate to keep the number of frozen provisions to 20, in case the U.S. returns to the pact in the future.
The challenge now is how to advance this basic agreement. It is clear that all 11 nations are keeping a close eye on U.S. reactions.
The recent Japan-U.S. summit revealed a stark difference between the two heads of states. While Prime Minister Abe values multilateral frameworks, President Trump clearly favored bilateral deals that facilitate the imposition of American demands on its counterpart. President Trump stated, in no uncertain terms, that the U.S. will not enter into multilateral frameworks that will restrict America, so it is unrealistic to expect the U.S. to come back to the TPP anytime soon.
Once TPP11 takes effect, the American agriculture and livestock industry will be at a disadvantage in exporting to Japan compared with TPP member states. When the U.S. faces this reality, it may step up the pressure to start Japan-U.S. FTA negotiations.
Japan does not need to rush to react to the launch of a U.S. offensive. It should first try to lure the U.S. back to the TPP. Even if it doesn’t succeed, it has no obligation to respond to any request that goes beyond TPP standards.
Significant in containing China’s influence
The U.S. doesn’t even try to conceal its protectionist trade and foreign policies as seen in its NAFTA renegotiation, applying pressure to Mexico and Canada to buy more U.S.-made auto parts.
The TPP11 will act as a bulwark against these kinds of impositions. It should be noted that Japan in particular is responsible for thwarting America’s protectionist policies as the TPP champion.
In doing so, Japan must bear China in mind. President Xi Jinping’s reiterated his intent to drive free trade in the remarks he made in Vietnam. China has been heightening its global presence as if to fill the void left by the U.S. when it pulled out of the TPP. This is most likely the reason the Central and South American Pacific Alliance nations, including TPP members like Mexico and Peru, are considering China’s eventual participation.
There is no question that the Xi administration’s ‘One Belt, One Road’ initiative encompasses not only its economic but also its military hegemonic strategy as well, in order to expand its regional sphere of influence.
Strategically, the TPP will also act to contain China’s ambitions, as it includes multiple advanced clauses on state-owned enterprises and e-commerce transactions that China can’t easily accept.
Japan must continue to promote high-quality multilateral cooperation like the TPP agreement in order to deter the expansion of economies like the Chinese in which arbitrary and unfair state interference are prevalent. This also applies to RCEP negotiations that involves both Japan and China.
The “free and open Indo-Pacific” message shared during the Japan-U.S. summit goes beyond security. Japan should tenaciously persuade the U.S. that the TPP is an effective way to achieve their common goal.